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Endogenous Timing in a Mixed Duopoly with Vertically Related Markets

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  • Lee, Ki-Dong
  • Choi, Kangsik
  • Lee, DongJoon

Abstract

We examine an endogenous timing game in a mixed oligopoly by focusing on the vertical linkages. Our main findings are as follows. First, under discriminatory input pricing, public (private) leadership emerges in a price-setting (quantity-setting) mixed oligopoly. This results contrast with one-tier mixed oligopoly, where a simultaneous-move in Bertrand competition (Bárcena-Ruiz, 2007) or a sequential-move with multiple equilibria in Cournot competition (Pal, 1998) emerges. Second, with downstream Bertrand competition, firmsʼ profit and consumer surplus rankings are reversed between uniform and discriminatory input pricing. Finally, banning (allowing) price discrimination on imported inputs is socially desirable under downstream Bertrand (Cournot) competition.

Suggested Citation

  • Lee, Ki-Dong & Choi, Kangsik & Lee, DongJoon, 2020. "Endogenous Timing in a Mixed Duopoly with Vertically Related Markets," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 61(1), pages 60-88, June.
    • Handle: RePEc:hit:hitjec:v:61:y:2020:i:1:p:60-88
    DOI: 10.15057/hje.2020004
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    References listed on IDEAS

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    Cited by:

    1. John S. Heywood & Zerong Wang & Guangliang Ye, 2022. "Strategic delegation in an international mixed oligopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 1888-1898, September.

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    More about this item

    Keywords

    endogenous-timing; observable delay game; mixed duopoly; vertically related; market; discriminatory input pricing;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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