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Price-setting mixed duopoly, subsidization and the order of firms' moves: the relevance of privatization

Author

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  • Kazuhiro Ohnishi

    (Institute for Basic Economic Science, Japan)

Abstract

This paper first examines a price-setting mixed duopoly game with production subsidies where a public firm acts as a leader against a private firm. Second, the paper examines a price-setting duopoly game with production subsidies where the public firm remains a leader after privatization. Third, the paper compares the equilibrium values for private leadership with those for public leadership and shows that the optimal subsidy and economic welfare are higher in the privatized Stackelberg market than in the mixed Stackelberg market. In consequence, we find that our result makes a sharp contrast with that of quantity-setting market games.

Suggested Citation

  • Kazuhiro Ohnishi, 2020. "Price-setting mixed duopoly, subsidization and the order of firms' moves: the relevance of privatization," Economics Bulletin, AccessEcon, vol. 40(4), pages 3071-3076.
    • Handle: RePEc:ebl:ecbull:eb-20-00913
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    File URL: http://www.accessecon.com/Pubs/EB/2020/Volume40/EB-20-V40-I4-P267.pdf
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    References listed on IDEAS

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    1. repec:ebl:ecbull:v:12:y:2007:i:26:p:1-7 is not listed on IDEAS
    2. White, Mark D., 1996. "Mixed oligopoly, privatization and subsidization," Economics Letters, Elsevier, vol. 53(2), pages 189-195, November.
    3. Joanna Poyago-Theotoky, 2001. "Mixed oligopoly, subsidization and the order of firms' moves: an irrelevance result," Economics Bulletin, AccessEcon, vol. 12(3), pages 1-5.
    4. Kenneth Fjell & John S. Heywood, 2002. "Public Stackelberg Leadership in a Mixed Oligopoly with Foreign Firms," Australian Economic Papers, Wiley Blackwell, vol. 41(3), pages 267-281, September.
    5. Fjell, Kenneth & Heywood, John S., 2004. "Mixed oligopoly, subsidization and the order of firm's moves: the relevance of privatization," Economics Letters, Elsevier, vol. 83(3), pages 411-416, June.
    6. Kazuhiro Ohnishi, 2010. "Domestic and international mixed models with price competition," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 57(1), pages 1-7, March.
    7. Fjell, Kenneth & Heywood, John S, 2002. "Public Stackelberg Leadership in a Mixed Oligopoly with Foreign Firms," Australian Economic Papers, Wiley Blackwell, vol. 41(3), pages 267-281, September.
    8. Juan Carlos Barcena-Ruiz & María Begoña Garzón, 2007. "Capacity Choice in a Mixed Duopoly under Price Competition," Economics Bulletin, AccessEcon, vol. 12(26), pages 1-7.
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    Cited by:

    1. Ohnishi, Kazuhiro, 2020. "Price-setting mixed duopoly, partial privatisation and subsidisation," MPRA Paper 104063, University Library of Munich, Germany.
    2. Ohnishi, Kazuhiro, 2023. "International mixed triopoly, privatization and subsidization," MPRA Paper 116070, University Library of Munich, Germany.
    3. Ohnishi, Kazuhiro, 2020. "Price-setting mixed duopoly, subsidization and the order of firms' moves: the relevance of privatization," MPRA Paper 102847, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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