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Endogenous Timing in Mixed Duopolies With Externality

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  • Toshihiro Matsumura
  • Akira Ogawa

Abstract

We investigate endogenous timing in a mixed duopoly with a negative externality. We find that quantity (price) competition yields a simultaneous†move (sequential†move) outcome under a significant negative externality. These results indicate that mixed duopolies yield the same results as private duopolies under a significant negative externality, which is in sharp contrast to the results in mixed duopolies without a negative externality. Unless the negative externality is insignificant, public leadership yields greater welfare than private leadership, and public leadership is more robust than the private leadership as equilibrium. If optimal environmental tax policy is introduced, however, private leadership yields the greatest welfare and this an equilibrium outcome in the endogenous timing game under quantity competition.

Suggested Citation

  • Toshihiro Matsumura & Akira Ogawa, 2017. "Endogenous Timing in Mixed Duopolies With Externality," Australian Economic Papers, Wiley Blackwell, vol. 56(4), pages 304-327, December.
  • Handle: RePEc:bla:ausecp:v:56:y:2017:i:4:p:304-327
    DOI: 10.1111/1467-8454.12104
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    Cited by:

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    2. Junichi Haraguchi & Toshihiro Matsumura, 2020. "Endogenous public and private leadership with diverging social and private marginal costs," Manchester School, University of Manchester, vol. 88(5), pages 699-730, September.
    3. Akio Kawasaki, 2021. "Optimal number of privatised products in a differentiated mixed oligopoly with free market entry," Australian Economic Papers, Wiley Blackwell, vol. 60(4), pages 651-663, December.
    4. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2018. "The Timing Of Environmental Tax Policy With A Consumer-Friendly Firm," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(1), pages 25-43, June.
    5. Sang-Ho Lee & Timur K. Muminov, 2021. "Endogenous Timing of R&D Decisions and Privatization Policy with Research Spillovers," Journal of Industry, Competition and Trade, Springer, vol. 21(4), pages 505-525, December.
    6. Shoji Haruna & Rajeev K. Goel, 2019. "Optimal pollution control in a mixed oligopoly with research spillovers," Australian Economic Papers, Wiley Blackwell, vol. 58(1), pages 21-40, March.

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