Equilibrium co-existence of public and private firms and the plausibility of price competition

Manipushpak Mitra, Rupayan Pal, Arindam Paul and P.M. Sharada

MPRA Paper from University Library of Munich, Germany

Abstract: We consider a differentiated product duopoly where a regulated firm competes with a private firm. The instrument of regulation is the level of privatization. First, the regulator determines the level of privatization to maximize social welfare. Then both firms endogenously choose the mode of competition (that is, whether to compete in price or quantity). Finally, the two firms compete in the market. Under a very general demand specification, we show that when the products are imperfect substitutes (complements), there is co-existence of private and public (strictly partially privatized) firms. Moreover, in the second stage, the firms compete in prices.

Keywords: Partially private firm; price (Bertrand) competition; quantity (Cournot) competition (search for similar items in EconPapers)
JEL-codes: D4 L1 L2 (search for similar items in EconPapers)
Date: 2017-10-06
New Economics Papers: this item is included in nep-bec, nep-com, nep-gth, nep-ind, nep-mic and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Equilibrium Coexistence of Public and Private Firms and the Plausibility of Price Competition (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:81802

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