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Optimal Manipulation Rules in a Mixed Duopoly

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Author Info

  • Corrado Benassi

    ()
    (Dipartimento di Scienze Economiche, Alma Mater Studiorum - Università di Bologna; The Rimini Centre for Economic Analysis (RCEA))

  • Alessandra Chirco

    (Dipartimento di Scienze Economiche e Matematico-Statistiche, Università del Salento)

  • Marcella Scrimitore

    (Dipartimento di Scienze Economiche e Matematico-Statistiche, Università del Salento; The Rimini Centre for Economic Analysis (RCEA))

Abstract

We study the optimal manipulation rules of a public firm’s objective function in a mixed duopoly with imperfect product substitutability. We compare the solutions under quantity and price competition, and the way in which they are affected by the degree of product substitutability. This allows us to show that partial privatization, strategic delegation and other specific government’s commitments on the objective function of the public management can be looked at as special cases of these optimal rules, and to evaluate the viability of these policies under the two modes of competition. In this framework, we also discuss the equivalence between manipulation of the objective function and Stackelberg leadership.

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Bibliographic Info

Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 43_11.

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Date of creation: Sep 2011
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Handle: RePEc:rim:rimwps:43_11

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Keywords: Mixed oligopoly; strategic manipulation; partial privatization;

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References

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  1. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
  2. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-47, Supplemen.
  3. Basu, Kaushik, 1995. "Stackelberg equilibrium in oligopoly: An explanation based on managerial incentives," Economics Letters, Elsevier, vol. 49(4), pages 459-464, October.
  4. Barros, Fatima, 1995. "Incentive schemes as strategic variables: An application to a mixed duopoly," International Journal of Industrial Organization, Elsevier, vol. 13(3), pages 373-386, September.
  5. Arghya Ghosh & Manipushpak Mitra, 2008. "Comparing Bertrand and Cournot Outcomes in the Presence of Public Firms," Discussion Papers 2008-18, School of Economics, The University of New South Wales.
  6. Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
  7. Chaim Fershtman & Kenneth L Judd, 1984. "Equilibrium Incentives in Oligopoly," Discussion Papers 642, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  8. repec:ebl:ecbull:v:30:y:2010:i:1:p:309-314 is not listed on IDEAS
  9. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, vol. 84(1), pages 27-48, 02.
  10. Miller, Nolan H & Pazgal, Amit I, 2001. "The Equivalence of Price and Quantity Competition with Delegation," RAND Journal of Economics, The RAND Corporation, vol. 32(2), pages 284-301, Summer.
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Citations

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Cited by:
  1. Scrimitore, Marcella, 2011. "Profitability in Cournot and Bertrand Mixed Markets under Endogenous Objectives," MPRA Paper 35643, University Library of Munich, Germany.
  2. Ritika Jain & Rupayan Pal, 2012. "Mixed duopoly, cross-ownership and partial privatization," Journal of Economics, Springer, vol. 107(1), pages 45-70, September.
  3. Alessandra Chirco & Caterina Colombo & Marcella Scrimitore, 2013. "Organizational Structure and the Choice of Price vs. Quantity in a Mixed Duopoly," Working Paper Series 27_13, The Rimini Centre for Economic Analysis.

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