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Journal of Economics

, Volume 117, Issue 2, pp 117–136 | Cite as

Cournot–Bertrand comparison in a mixed oligopoly

  • Junichi HaraguchiEmail author
  • Toshihiro Matsumura
Article

Abstract

We revisit the classic discussion comparing price and quantity competition, but in a mixed oligopoly in which one state-owned public firm competes against private firms. It has been shown that in a mixed duopoly, price competition yields a larger profit for the private firm. This implies that firms face weaker competition under price competition, which contrasts sharply with the case of a private oligopoly. Here, we adopt a standard differentiated oligopoly with a linear demand. We find that regardless of the number of firms, price competition yields higher welfare. However, the profit ranking depends on the number of private firms. We find that if the number of private firms is greater than or equal to five, it is possible that quantity competition yields a larger profit for each private firm. We also endogenize the price-quantity choice. Here, we find that Bertrand competition can fail to be an equilibrium, unless there is only one private firm.

Keywords

Cournot Bertrand Mixed markets Differentiated products Oligopoly 

JEL Classification

H42 L13 

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Copyright information

© Springer-Verlag Wien 2015

Authors and Affiliations

  1. 1.Graduate School of EconomicsThe University of TokyoTokyoJapan
  2. 2.Institute of Social ScienceThe University of TokyoTokyoJapan

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