Inefficient but robust public leadership

Toshihiro Matsumura and Akira Ogawa ()

MPRA Paper from University Library of Munich, Germany

Abstract: We investigate endogenous timing in a mixed duopoly in a differentiated product market. We find that private leadership is better than public leadership from a social welfare perspective if the private firm is domestic, regardless of the degree of product differentiation. Nevertheless, the public leadership equilibrium is risk-dominant, and it is thus robust if the degree of product differentiation is high. We also find that regardless of the degree of product differentiation, the public leadership equilibrium is risk-dominant if the private firm is foreign. These results may explain the recent revival of public financial institutions in Japan.

Keywords: public financial institutions; differentiated products; risk dominance; Stackelberg (search for similar items in EconPapers)
JEL-codes: H42 L13 (search for similar items in EconPapers)
Date: 2014-06-09
New Economics Papers: this item is included in nep-com and nep-mic
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Citations: View citations in EconPapers (1)

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Journal Article: Inefficient but Robust Public Leadership (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:56539

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