Tuesday, July 5, 2011
Posted by D. Daniel Sokol
Tamas L. Balogh and Attila Tasnadi ask Does timing of decisions in a mixed duopoly matter?
ABSTRACT: We determine the endogenous order of moves in a mixed price-setting duopoly. In contrast to the existing literature on mixed oligopolies we establish the payoff equivalence of the games with an exogenously given order of moves. Hence, it does not matter whether one becomes a leader or a follower. We also establish that replacing a private firm by a public firm in the standard Bertrand-Edgeworth game with capacity constraints increases social welfare and that a pure-strategy equilibrium always exists.