Endogenous timing in a mixed oligopoly

Pal, Debashis

doi:10.1016/s0165-1765(98)00115-3

Cited by 199 publications

(239 citation statements)

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“…Thus, we demonstrate the existence of multiple SPNE, the nature of which depends on the level of uncertainty and public ownership. Crucially, we show that unlike in Pal (1998) andMatsumura (2003a), Cournot outcome is a part of the SPNE set. Since output and social welfare are usually lower in a Cournot equilibrium than in the Stackelberg leadership case, our result has significant implications for public policy in the context of mixed oligopoly.…”

Section: Introductionmentioning

confidence: 61%

“…The former implies that firm 1 prefers E to L, while the latter implies that firm 2 chooses L over E. Note that − 2 > 0. Thus, whether (E, Pal (1998) demonstrates that simultaneous production by both firms can never be a SPNE. He also shows that both Stackelberg outcomes (public leadership and private leadership) are equilibrium outcomes.…”

Section: Proposition 1 Consider a Mixed Duopoly In Which The Demand mentioning

confidence: 99%

“…The order of moves in a mixed oligopoly model was first endogenized by Pal (1998). He adopted the observable delay game of Hamilton and Slutsky (1990) where firms in the first stage determine whether to lead or follow and then set quantities accordingly in the later stages.…”

Section: Introductionmentioning

confidence: 99%

“…In particular, we revisit the nature of equilibria in the observable delay games analyzed by Pal (1998) and Matsumura (2003a). 3 ,4 We follow the uncertainty regime in Brown and Chiang (2003) and assume a linear market demand that is subject to an additive disturbance.…”

Section: Introductionmentioning

confidence: 99%

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Mixed Oligopoly under Demand Uncertainty

Anam

Basher

Chiang

2007

The B.E. Journal of Theoretical Economics

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In this paper we introduce product demand uncertainty in a mixed oligopoly model and reexamine the nature of sub-game perfect Nash equilibrium (SPNE) when firms decide in the first stage whether to lead or follow in the subsequent quantity-setting game. In the non-stochastic setting, Pal (1998) demonstrated that when the public firm competes with a domestic private firm, multiple equilibria exist but the efficient equilibrium outcome is for the public firm to follow. Matsumura (2003a) proved that when the public firm's rival is a foreign private firm, leadership of the public firm is both efficient as well as SPN equilibrium. Our stochastic model shows that when the leader must commit to output before the resolution of uncertainty, multiple SPNE is possible. Whether the equilibrium outcome is public or private leadership hinges upon the degree of privatization and market volatility.More importantly, Pareto-inefficient simultaneous production is a likely SPNE. Our results are driven by the fact that the resolution of uncertainty enhances the profits of the follower firm in a manner that is well known in real option theory. JEL classification: C72, D8, L13.Keywords: Mixed oligopoly; Partial privatization; Demand Uncertainty. * We are grateful to three anonymous referees and the editor for useful comments and suggestions. We also thank Debashis Pal, Kin Chung Lo, Ahmed Saber Mahmud, and seminar participants at York University and 2005 CEA meeting for helpful discussions. The usual disclaimer applies.

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Section: Introductionmentioning

confidence: 61%

Section: Proposition 1 Consider a Mixed Duopoly In Which The Demand mentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Mixed Oligopoly under Demand Uncertainty

Anam

Basher

Chiang

2007

The B.E. Journal of Theoretical Economics

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“…Pal (1998) analyses a domestic oligopoly with linear cost and demand functions; Matsumura (2003) focused on international mixed duopoly with convex costs and concave demand; Cornes and Sepahvand (2003) and Sepahvand (2004) consider international mixed duopolies with strictly log-concave demand and strictly convex cost functions. The aim of the present work is to generalize their analysis for the general case of a mixed duopoly (both domestic and international) limiting the assumptions to the mildest conditions needed to ensure existence of equilibria.…”

Section: Introductionmentioning

confidence: 99%

Endougenous Timing in a Mixed Duopoly

Amir

Feo

2012

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may May 2011Abstract This paper applies the framework of endogenous timing in games to mixed quantity duopoly, wherein a private -domestic or foreign -firm competes with a public, welfaremaximizing firm. We show that simultaneous play never emerges as a subgame-perfect equilibrium of the extended game, in sharp contrast to private duopoly games. We provide sufficient conditions for the emergence of public and/or private leadership equilibrium. In all cases, private profits and social welfare are higher than under the corresponding Cournot equilibrium. From a methodological viewpoint we make extensive use of the basic results from the theory of supermodular games in order to avoid common extraneous assumptions such as concavity, existence and uniqueness of the different equilibria, whenever possible. Some policy implications are drawn, in particular those relating to the merits of privatization.

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Endogenous Role in Mixed Markets: A Two‐Production‐Period Model

Matsumura

2003

Southern Economic Journal

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In this paper, I investigate endogenous roles in a mixed duopoly, where private and state‐owned public turns compete, by allowing two production periods. I find that many equilibria exist, including the Coumot‐type equilibrium and one Stackelberg‐type equilibrium where the public firm becomes the follower. However, another Stackelberg‐type equilibrium where the public firm becomes the leader does not exist. If small inventory costs are introduced, the unique equilibrium outcome becomes the Stackelberg type where the public firm is the follower.

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Endogenous timing in a mixed oligopoly

Cited by 199 publications

References 11 publications

Mixed Oligopoly under Demand Uncertainty

Mixed Oligopoly under Demand Uncertainty

Endougenous Timing in a Mixed Duopoly

Endogenous Role in Mixed Markets: A Two‐Production‐Period Model

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