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Optimal manipulation rules in a mixed oligopoly

Author

Listed:
  • Corrado Benassi
  • Alessandra Chirco
  • Marcella Scrimitore

Abstract

We study the optimal manipulation rules of a public firm’s objective function in a mixed oligopoly with imperfect product substitutability. We start with a baseline duopoly model and compare the solutions under quantity and price competition, and the way they are affected by 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. Since optimal manipulation rules change as new dimensions are added, we also derive the optimal rules under oligopoly, quadratic costs, and competition of international firms. This fairly general unified framework allows to discuss the impact of these factors on the government’s implementation policies of the optimal manipulation rules. Copyright Springer-Verlag Wien 2014

Suggested Citation

  • Corrado Benassi & Alessandra Chirco & Marcella Scrimitore, 2014. "Optimal manipulation rules in a mixed oligopoly," Journal of Economics, Springer, vol. 112(1), pages 61-84, May.
  • Handle: RePEc:kap:jeczfn:v:112:y:2014:i:1:p:61-84
    DOI: 10.1007/s00712-012-0332-2
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    References listed on IDEAS

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    Cited by:

    1. Corrado Benassi & Alessandra Chirco & Caterina Colombo, 2021. "Efficiency of bilateral delegation in a mixed Cournot duopoly," Metroeconomica, Wiley Blackwell, vol. 72(3), pages 493-508, July.
    2. Planer-Friedrich, Lisa & Sahm, Marco, 2017. "Strategic corporate social responsibility," BERG Working Paper Series 124, Bamberg University, Bamberg Economic Research Group.
    3. Armel Jacques, 2022. "Strategic debt in a mixed duopoly: The limited liability effect," TEPP Working Paper 2022-14, TEPP.
    4. Lisa Planer-Friedrich & Marco Sahm, 2017. "Strategic Corporate Social Responsibility," CESifo Working Paper Series 6506, CESifo.
    5. Kopel, Michael & Lamantia, Fabio, 2018. "The persistence of social strategies under increasing competitive pressure," Journal of Economic Dynamics and Control, Elsevier, vol. 91(C), pages 71-83.
    6. Marcella Scrimitore, 2014. "Profitability under Commitment in Cournot and Bertrand Mixed Markets," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 170(4), pages 684-703, December.
    7. Nakamura, Tamotsu & Takami, Hiroyuki, 2015. "Nash bargaining and partial privatization in mixed oligopoly," Economic Modelling, Elsevier, vol. 46(C), pages 315-321.

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    More about this item

    Keywords

    Mixed oligopoly; Strategic manipulation; Partial privatization; D43; L13; L32;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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