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Price or quantity? The strategic choice of subsidized firms in a mixed duopoly

Marcella Scrimitore ()

Economics Letters, 2013, vol. 118, issue 2, 337-341

Abstract: This paper investigates the endogenous choice of the strategic variable, price or quantity, taken in a mixed duopoly by a public and a private firm prior to market competition. While Matsumura and Ogawa (2012) in a standard mixed duopoly find that price is the unique equilibrium, we show that, by introducing firm subsidization in the same setting, quantity can constitute a dominant strategy equilibrium.

Keywords: Price competition; Quantity competition; Mixed market; Subsidy (search for similar items in EconPapers)
JEL-codes: D43 L32 (search for similar items in EconPapers)
Date: 2013
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DOI: 10.1016/j.econlet.2012.11.015

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