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A new irrelevance result in an endogenous timing with a consumer-friendly public firm

Author

Listed:
  • Garcia, Arturo
  • Leal, Mariel
  • Lee, Sang-Ho

Abstract

This study considers a mixed duopoly with a consumer-friendly public firm and analyzes an endogenous timing game in the presence of output subsidy and emission tax. We provide a new irrelevance result concerning the choice of government policy in which regardless of the policy mix, the equilibrium of endogenous market structure is determined by the public firm’s concern on consumer surplus. We also show that the optimal policy mix can attain the first-best allocation for social welfare only when both firms have symmetric payoffs, which results in simultaneous-move outcome.

Suggested Citation

  • Garcia, Arturo & Leal, Mariel & Lee, Sang-Ho, 2018. "A new irrelevance result in an endogenous timing with a consumer-friendly public firm," MPRA Paper 85648, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:85648
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    File URL: https://mpra.ub.uni-muenchen.de/85648/1/MPRA_paper_85648.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Keywords: irrelevance result; endogenous timing game; consumer-friendly public firm; emission tax; output subsidy;

    JEL classification:

    • 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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