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Cournot–Bertrand comparison under common ownership in a mixed oligopoly

Xu, Lili and Zhang, Yidan and Matsumura, Toshihiro (2022): Cournot–Bertrand comparison under common ownership in a mixed oligopoly.

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Abstract

Price competition is more intense than quantity competition in private oligopolies, wherein all firms are profit maximizers. However, in mixed oligopolies where one state-owned public firm competes with profit-maximizing private firms, price competition may not provide tougher competition than quantity competition. In this study, we introduce common ownership, a distinct feature of recent financial markets, into a mixed oligopoly model and investigate how common ownership affects this ranking. We find that under common ownership, quantity competition is likely to be tougher than price competition. Moreover, we find that common ownership harms welfare regardless of competition mode. Common ownership enhances private firms’ profits under Bertrand competition while these may decline under Cournot competition.

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