Thursday, June 14, 2018
Gutiérrez-Hita, Carlos and Vicente-Pérez, José provide thoughts On supply function competition in a mixed oligopoly.
ABSTRACT: In this paper we present a mixed duopoly model of supply function competition under uncertainty with product differentiation. We find that, regardless the nature of product heterogeneity, the best response of the private firm always arises as strategic complement. Contrary to this, state-owned firm's best response arises either as strategic complement or substitute depending on the product heterogeneity. As a result of the ex post realization of the demand uncertainty, different equilibria are reached.