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Mixed Duopoly, Privatization And Subsidization In An Endogenous Timing Framework

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  • YOSHIHIRO TOMARU
  • MASAYUKI SAITO

Abstract

This is the first paper to consider the endogenous timing in mixed duopoly with subsidization. Pal (Economics Letters, Vol. 61 (1998), pp. 181-185) shows that private leadership is always an equilibrium outcome in a mixed duopoly without any subsidy. By including the production subsidy, we observe that private leadership may disappear from equilibrium and that Cournot and public leadership become the likely equilibrium outcomes. Furthermore, we find that when firms have identical technologies the first-best allocation can be attained by the same subsidy before and after privatization even though firms' production timings are endogenized. Finally, we examine privatization with lobbying activities and show that such privatization leads to the deterioration of social welfare. Copyright © 2009 The Authors. Journal compilation © 2009 Blackwell Publishing Ltd and The University of Manchester.

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  • Yoshihiro Tomaru & Masayuki Saito, 2010. "Mixed Duopoly, Privatization And Subsidization In An Endogenous Timing Framework," Manchester School, University of Manchester, vol. 78(1), pages 41-59, January.
  • Handle: RePEc:bla:manchs:v:78:y:2010:i:1:p:41-59
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    References listed on IDEAS

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    Cited by:

    1. Scrimitore, Marcella, 2014. "Quantity competition vs. price competition under optimal subsidy in a mixed oligopoly," Economic Modelling, Elsevier, vol. 42(C), pages 166-176.
    2. Bian, Junsong & Guo, Xiaolei & Li, Kevin W., 2015. "Distribution channel strategies in a mixed market," International Journal of Production Economics, Elsevier, vol. 162(C), pages 13-24.
    3. repec:eee:reveco:v:50:y:2017:i:c:p:1-7 is not listed on IDEAS
    4. repec:kap:jincot:v:17:y:2017:i:4:d:10.1007_s10842-017-0248-1 is not listed on IDEAS
    5. repec:bpj:bejtec:v:17:y:2017:i:2:p:9:n:2 is not listed on IDEAS
    6. Lee, Sang-Ho & Tomaru, Yoshihiro, 2017. "Output and R&D subsidies in a mixed oligopoly," MPRA Paper 84410, University Library of Munich, Germany.
    7. Scrimitore, Marcella, 2013. "Price or quantity? The strategic choice of subsidized firms in a mixed duopoly," Economics Letters, Elsevier, vol. 118(2), pages 337-341.
    8. repec:spr:jecfin:v:41:y:2017:i:2:d:10.1007_s12197-015-9346-2 is not listed on IDEAS
    9. Toshihiro Matsumura & Akira Ogawa, 2009. "Payoff dominance and risk dominance in the observable delay game: a note," Journal of Economics, Springer, vol. 97(3), pages 265-272, July.
    10. Kojun Hamada, 2016. "Privatization neutrality theorem in a mixed oligopoly with firm asymmetry," Economics Bulletin, AccessEcon, vol. 36(1), pages 395-400.
    11. Marcella Scrimitore, 2012. "Quantity Competition vs. Price Competition under Optimal Subsidy in a Mixed Duopoly," EERI Research Paper Series EERI_RP_2012_15, Economics and Econometrics Research Institute (EERI), Brussels.
    12. Wang F.S., Leonard & Chen, Tai-Liang, 2011. "Privatization, Efficiency Gap, and Subsidization with Excess Taxation Burden," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 52(1), pages 55-68, June.
    13. Matsumura, Toshihiro & Okumura, Yasunori, 2013. "Privatization neutrality theorem revisited," Economics Letters, Elsevier, vol. 118(2), pages 324-326.
    14. Daisuke Hirata & Toshihiro Matsumura, 2011. "Price leadership in a homogeneous product market," Journal of Economics, Springer, vol. 104(3), pages 199-217, November.
    15. Haruna Shoji & Goel Rajeev K., 2016. "International Tariffs in a Mixed Oligopoly with Research Spillovers," Peace Economics, Peace Science, and Public Policy, De Gruyter, vol. 22(3), pages 277-293, August.
    16. Lin, Ming Hsin & Matsumura, Toshihiro, 2017. "Optimal Privatization Policy under Private Leadership in Mixed Oligopolies," MPRA Paper 79913, University Library of Munich, Germany.
    17. Hirose, Kosuke & Matsumura, Toshihiro, 2017. "Comparing Welfare and Profit in Quantity and Price Competition within Stackelberg Mixed Duopolies," MPRA Paper 77700, University Library of Munich, Germany.
    18. Lin, Ming Hsin & Matsumura, Toshihiro, 2017. "Optimal Privatization and Uniform Subsidy Policies: A Synthesis," MPRA Paper 77285, University Library of Munich, Germany.
    19. Cho, Sumi & Lee, Sang-Ho, 2017. "Subsidization Policy on the Social Enterprise for the Underprivileged," MPRA Paper 84411, University Library of Munich, Germany.
    20. Toshihiro Matsumura & Akira Ogawa, 2017. "Inefficient but Robust Public Leadership," Journal of Industry, Competition and Trade, Springer, vol. 17(4), pages 387-398, December.

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