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Endogenous Timing in a Mixed Duopoly: Wighted Welfare and Price Competition

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  • Bárcena Ruiz, Juan Carlos
  • Sedano Hoyuelos, Máximo

Abstract

In this paper we analyse the endogenous order of moves in a mixed duopoly for differentiated goods. Firms choose whether to set prices sequentially or simultaneously. The private firm maximises profits while the public firm maximises the weighted sum of the consumer and producer surpluses (wighted welfare). It is shown that the result obtained in equilibrium depends crucially on the weigth given to the consumer surplus in weighted welfare and on the degree to which goods are substitutes or complements. We also anlyse whether the equilibria obtained maximise the sum of the consumer and producer suspluses or not. Finally we study whether the nationality of the private firm influences the results.

Suggested Citation

  • Bárcena Ruiz, Juan Carlos & Sedano Hoyuelos, Máximo, 2011. "Endogenous Timing in a Mixed Duopoly: Wighted Welfare and Price Competition," IKERLANAK 2011-46, Universidad del País Vasco - Departamento de Fundamentos del Análisis Económico I.
  • Handle: RePEc:ehu:ikerla:6369
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    References listed on IDEAS

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    1. Antonio Cabrales & José-Ramón Uriarte, 2013. "Doubts and equilibria," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 783-810, September.
    2. Cabrales, Antonio, 2000. "Stochastic Replicator Dynamics," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(2), pages 451-481, May.
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    4. Schlag, Karl H., 1998. "Why Imitate, and If So, How?, : A Boundedly Rational Approach to Multi-armed Bandits," Journal of Economic Theory, Elsevier, vol. 78(1), pages 130-156, January.
    5. Stauffer, Dietrich & Castelló, Xavier & Eguíluz, Víctor M. & San Miguel, Maxi, 2007. "Microscopic Abrams–Strogatz model of language competition," Physica A: Statistical Mechanics and its Applications, Elsevier, vol. 374(2), pages 835-842.
    6. Uriarte, Jose Ramon, 2007. "A behavioural foundation for models of evolutionary drift," Journal of Economic Behavior & Organization, Elsevier, vol. 63(3), pages 497-513, July.
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    Cited by:

    1. Toshihiro Matsumura & Akira Ogawa, 2017. "Inefficient but Robust Public Leadership," Journal of Industry, Competition and Trade, Springer, vol. 17(4), pages 387-398, December.
    2. Dong, Quan & Bárcena-Ruiz, Juan Carlos, 2014. "Corruption and decisions on opening up markets," Economic Modelling, Elsevier, vol. 36(C), pages 23-29.

    More about this item

    Keywords

    mixed duopoly; price competition; endogenous timing; weighted welfare;

    JEL classification:

    • L00 - Industrial Organization - - General - - - General
    • L30 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - General

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