Mixed oligopoly, vertical product differentiation and fixed quality-dependent costs

Stefan Lutz and Mario Pezzino (mario.pezzino@manchester.ac.uk)

ICER Working Papers from ICER - International Centre for Economic Research

Abstract: A private and a public firm face fixed quality-dependent costs of production and compete first in quality and then either in prices or in quantities. In the long run the public firm targets welfare maximization whereas the private firm maximizes profits. In the short run both firms compete in prices or quantities to maximize profits. Mixed competition is always socially desirable compared to a private duopoly regardless of the type of competition in the short run and the equilibrium quality ranking. In addition, mixed competition seems to be a more efficient regulatory instrument than the adoption of a minimum quality standard.

Keywords: vertical product differentiation; mixed oligopoly; quality; price and quantity competition (search for similar items in EconPapers)
JEL-codes: H44 L13 L33 L50 (search for similar items in EconPapers)
Pages: 26 pages
Date: 2010-05
New Economics Papers: this item is included in nep-bec, nep-com and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Working Paper: Mixed oligopoly, vertical product differentiation and fixed qualitydependent costs (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:icr:wpicer:08-2010

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