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Endogenous strategic variable in a mixed duopoly

Amarjyoti Mahanta ()
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Amarjyoti Mahanta: Indian Institute of Technology, Guwahati

Journal of Economics, 2019, vol. 128, issue 1, No 3, 47-65

Abstract: Abstract In this paper we endogenize the choice of strategic variables in a mixed duopoly market in which each firm produces a homogeneous product with a strictly increasing convex cost function. This allows us to endogenously determine the type of competition in a mixed duopoly. We get the interesting result that price competition is a dominant strategy for each firm in a mixed duopoly. The firms randomize among the prices belonging to the equilibrium range of price in Bertrand competition. It is different from the outcome in a simple duopoly market where both price competition and quantity competition are pure strategy Nash equilibrium. Thus, this paper establishes that the presence of a public firm influences the kind of competition that takes place in a duopoly market.

Keywords: Mixed duopoly; Endogenous competition; Bertrand competition; Cournot competition (search for similar items in EconPapers)
JEL-codes: D21 D43 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.1007/s00712-018-0641-1

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