Profitability in Cournot and Bertrand Mixed Markets under Endogenous Objectives
AbstractWe examine both quantity and price competition between a number of profit-maximizing firms and a state-controlled enterprise (SCE). The objective function of the latter is strategically defined by a welfare-maximizing government which weighs the SCE’s profits relative to consumer surplus and private profits. Different motives drive the government‘s optimal behavior in the two competitive settings and lead all firms in oligopoly to gain higher profits in Cournot than in Bertrand. The profit ordering is reverted, and social welfare is enhanced, with respect to the purely-mixed market examined by Ghosh and Mitra (2010). In duopoly, aggregate profits are equivalent in Cournot and Bertrand.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 35643.
Date of creation: 24 Oct 2011
Date of revision:
Cournot; Bertrand; endogenous objectives; partial privatization;
Find related papers by JEL classification:
- L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
This paper has been announced in the following NEP Reports:
- NEP-ALL-2012-01-10 (All new papers)
- NEP-BEC-2012-01-10 (Business Economics)
- NEP-COM-2012-01-10 (Industrial Competition)
- NEP-IND-2012-01-10 (Industrial Organization)
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