A MODEL OF ENDOGENOUS PAYOFF MOTIVES AND ENDOGENOUS TIMING IN A MIXED DUOPOLY*

Kangsik Choi and Yuanzhu Lu ()

Australian Economic Papers, 2009, vol. 48, issue 3, 203-223

Abstract: A model of endogenous payoff motives and endogenous order of moves is analysed in a mixed duopoly. We find that, when a non‐negative price constraint is imposed on public and private firms' quantity choice, both firms always choose to be relative‐payoff‐maximisers, and both simultaneous move and sequential move can be sustained in equilibrium. In contrast, when non‐negative absolute profit constraint is imposed, public and private firms always choose to be absolute‐payoff‐maximisers, and only sequential move can be sustained in equilibrium.

Date: 2009
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https://doi.org/10.1111/j.1467-8454.2009.00371.x

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