The Choice of Capacity in Mixed Duopoly under Demand Uncertainty

Yuanzhu Lu () and Sougata Poddar ()

No 507, CEMA Working Papers from China Economics and Management Academy, Central University of Finance and Economics

Abstract: We analyze the capacity choice of firms under demand uncertainty in a mixed duopoly market consisting of one private firm and one public firm. We define a two-stage game where firms choose capacity in the first stage without knowing which state of Nature is going to be realized, and output in the second stage knowing which state is realized. We address the question of maintaining over and under capacity in the equilibrium as a strategic device; and show that both symmetric and asymmetric outcomes can be realized.

Pages: 7 pages
Date: 2004-11-25
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Published in Journal of Economics, Vol. 88 (2006), No. 1, pp. 49¨C68

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Related works:
Journal Article: THE CHOICE OF CAPACITY IN MIXED DUOPOLY UNDER DEMAND UNCERTAINTY* (2006)
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Persistent link: https://EconPapers.repec.org/RePEc:cuf:wpaper:507

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