Endogenous Timing in Mixed Duopoly with Wage-Rise Contracts as Strategic Device

Document Type: Original Research

Author

Institute for Basic Economic Science, Osaka, Japan

Abstract

This paper considers a mixed duopoly market in which a private firm competes against a public firm. Each firm first has to choose the timing for offering a wage-rise contract as a strategic device. The timing of the game is as follows. In stage one, each firm chooses either stage two or stage three simultaneously and independently. In stage two, the firm choosing stage two offers a wage-rise contract in this stage. In stage three, the firm choosing stage three offers a wage-rise contract in this stage. At the end of the game, each firm chooses its actual output simultaneously and independently. The paper studies the behavior of the public firm and the private firm in the mixed duopoly model. The aim of this paper is to present the equilibrium outcome of the mixed duopoly model.

Keywords


Bárcena-Ruiz, J. C. (2007). Endogenous timing in a mixed duopoly: price competition. Journal of Economics, 91, 263-272.
Beladi, H., & Chao, C.-C. (2006). Does privatization improve the environment? Economics Letters, 93, 343-347.
Bulow, J., Geanakoplos, J., & Klemperer, P. (1985). Multimarket oligopoly: strategic substitutes and complements. Journal of Political Economy, 93, 488-511.
Hamilton, J. H., & Slutsky, S. M. (1990). Endogenous timing in duopoly games: Stackelberg or Cournot equilibria. Games and Economic Behavior, 2, 29-46.
Heywood, J. S., & Ye, G. (2010). Optimal privatization in a mixed duopoly with consistent conjectures. Journal of Economics, 101, 231-246.
Hsu, C.-C. Lee, J.-Y., & Wang, L. F. S. (2018). Undesirable free entry in oligopoly with foreign competitors. In K. Ohnishi, Firms' Strategic Decisions: Theoretical and Empirical Findings, Volume 3 (pp. 127-143). Sharjah, UAE: Bentham Science Publishers.
Lu, Y., & Poddar, S. (2007). Firm ownership, product differentiation and welfare. The Manchester School, 75, 210-217.
Lu, Y., & Poddar, S. (2009). Endogenous timing in a mixed duopoly and private duopoly – ‘capacity-then-quantity’ game: the linear demand case. Australian Economic Papers, 48, 138-150.
Merrill, W., & Schneider, N. (1966). Government firms in oligopoly industries: a short-run analysis. Quarterly Journal of Economics, 80, 400-412.
Nett, L. (1994). Why private firms are more innovative than public firms. European Journal of Political Economy, 10, 639-653.
Ohnishi, K. (2003). A model of a price-setting duopoly with a wage-rise contract. Australian Economic Papers, 42, 149-157.
Ohnishi, K. (2008). Mixed duopoly with wage-rise contract as strategic commitments. Ekonomia, 11, 35-49.
Ohnishi, K. (2010). Wage-rise contract and endogenous timing in international mixed duopoly. Research in Economics, 64, 121-127.
Ohnishi, K. (2015). Wage-rise contract and a three-stage model with state-owned and labour-managed firms. In K. Ohnishi, Firms’ Strategic Decisions: Theoretical and Empirical Findings, Volume 1 (pp. 139-154). Sharjah, UAE: Bentham Science Publishers.
Pal, D. (1998). Endogenous timing in a mixed oligopoly. Economics Letters, 61, 181-185.
Saha, B., & Sensarma, R. (2008). The distributive role of managerial incentives in a mixed duopoly. Economics Bulletin, 12, 1-10.
Willner, J. (1994). Welfare maximization with endogenous average costs. International Journal of Industrial Organization, 12, 373-386.
Xu, L., Lee, S.-H., & Wang, L. F. S. (2018). Strategic trade and privatization policies in bilateral mixed markets. In K. Ohnishi, Firms’ Strategic Decisions: Theoretical and Empirical Findings, Volume 3 (pp. 101-126). Sharjah, UAE: Bentham Science Publishers.