Leadership

Does Timing Of Decisions In A Mixed Duopoly Matter?

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Executive Summary

The authors determine the endogenous order of moves in a mixed price-setting duopoly. In contrast to the existing literature on mixed oligopolies they establish the payoff equivalence of the games with an exogenously given order of moves. Hence, it does not matter whether one becomes a leader or a follower. They also establish that replacing a private firm by a public firm in the standard Bertrand-Edgeworth game with capacity constraints increases social welfare and that pure-strategy equilibrium always exists.

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