Munich Personal RePEc Archive

Inefficient but robust public leadership.

Matsumura, Toshihiro and Ogawa, Akira (2014): Inefficient but robust public leadership.

[img]
Preview
PDF
MPRA_paper_56539.pdf

Download (118kB) | Preview

Abstract

We investigate endogenous timing in a mixed duopoly in a differentiated product market. We find that private leadership is better than public leadership from a social welfare perspective if the private firm is domestic, regardless of the degree of product differentiation. Nevertheless, the public leadership equilibrium is risk-dominant, and it is thus robust if the degree of product differentiation is high. We also find that regardless of the degree of product differentiation, the public leadership equilibrium is risk-dominant if the private firm is foreign. These results may explain the recent revival of public financial institutions in Japan.

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.