TY - JOUR
T1 - Interregional mixed duopoly
AU - Inoue, Tomohiro
AU - Kamijo, Yoshio
AU - Tomaru, Yoshihiro
N1 - Funding Information:
We wish to thank Toshihiro Matsumura, Dan Sasaki, Noriaki Matsushima, Kazuharu Kiyono, Yukihiko Funaki, Yoshihisa Baba, and the participants at the ISS Industrial Organization Workshop at the University of Tokyo, the 2007 Spring Meeting of JEA at Osaka Gakuin University, and the 2008 GLOPE-TCER Joint Junior Workshop on Political Economy at Waseda University for their helpful comments. We would also like to thank two anonymous referees for their valuable comments and suggestions. We appreciate the financial support from the Japanese Ministry of Education, Culture, Sports, Science and Technology under the Waseda University 21st-COE GLOPE project. Needless to say, we are responsible for any remaining errors.
PY - 2009/3
Y1 - 2009/3
N2 - We investigate an interregional mixed duopoly wherein a local public firm competes against a private firm. We employ a spatial model with price competition. The public firm is owned by the local government of the left half of the linear city called Region 1, and maximizes its welfare. We demonstrate that our two-stage game comprising location choice and price competition has two types of equilibria. In one equilibrium (E1), the local public firm locates in Region 1, and the private firm locates outside the region. In the other equilibrium (E2), both firms are located in Region 1. We find that although the two firms are closely located in E2, E2 payoff-dominates E1. Moreover, E2 is robust in the sense that the sequential choice of location adopts this equilibrium, regardless of whether the public firm is a leader or a follower.
AB - We investigate an interregional mixed duopoly wherein a local public firm competes against a private firm. We employ a spatial model with price competition. The public firm is owned by the local government of the left half of the linear city called Region 1, and maximizes its welfare. We demonstrate that our two-stage game comprising location choice and price competition has two types of equilibria. In one equilibrium (E1), the local public firm locates in Region 1, and the private firm locates outside the region. In the other equilibrium (E2), both firms are located in Region 1. We find that although the two firms are closely located in E2, E2 payoff-dominates E1. Moreover, E2 is robust in the sense that the sequential choice of location adopts this equilibrium, regardless of whether the public firm is a leader or a follower.
KW - Interregional mixed duopoly
KW - Local public firm
KW - Spatial model
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U2 - 10.1016/j.regsciurbeco.2008.10.001
DO - 10.1016/j.regsciurbeco.2008.10.001
M3 - Article
AN - SCOPUS:59349110735
SN - 0166-0462
VL - 39
SP - 233
EP - 242
JO - Regional Science and Urban Economics
JF - Regional Science and Urban Economics
IS - 2
ER -