Quantity Precommitment and Mixed Duopoly with Price Competition

Firms` Strategic Decisions Theoretical and Empirical Findings

Volume: 1

DOI: 10.2174/9781681080383115010015
eISBN: 978-1-68108-038-3, 2015
ISBN: 978-1-68108-039-0
ISSN: 2405-8424 (Print)
ISSN: 2405-8432 (Online)

Indexed in: EBSCO.

This eBook presents recent case studies on firms and their strategy employed in specific scenarios and industries. Readers will find, in this volume, an analysis of oligopolistic industries done by ...

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Quantity Precommitment and Mixed Duopoly with Price Competition

Pp. 182-194 (13)

Kazuhiro Ohnishi

Abstract

This chapter investigates a mixed duopoly model where a capitalist private firm and a state-owned public firm coexist. The following two-stage game is considered. At stage one, the firms choose whether or not to provide lifetime employment as a strategic device simultaneously and noncooperatively. This irreversible behavior changes the price-competing market environment of stage two. At stage two, the firms set prices simultaneously and noncooperatively. The chapter discusses the equilibrium solution of the mixed market model. As a result of this analysis, we discover that introducing lifetime employment into the model of price-setting mixed duopoly may be beneficial for the state-owned firm.

Keywords:

Capitalist private firm, consumer surplus, lifetime employment, mixed duopoly, price competition, quantity precommitment, reaction functions, economic welfare, state-owned public firm, subgame perfection.

Affiliation:

Institute for Basic Economic Science, 2-15-12 Hanjo, Minoo, Osaka 562-0044, Japan.