SFB 303 Discussion Paper No. A - 358
Author: Nett, Lorenz
Title: Mixed Oligopoly -A Survey-
Abstract: In this paper we present the main results of the literature on mixed oligopoly where all firms supply a
homogenous product. However, this kind of literature has also some importance for reconsidering oligopolistic
markets where big share-holding companies operate. The structure of the paper is as follows: after presenting the
basic framework, we demonstrate that in the mixed oligopoly market we have a 'Cournot-Paradox' quite similar
to the well-known Bertrand-Paradox. Having this in mind we present the literature ordered with respect to its
main topics: optimal pricing policies, comparison of the allocations to the same situation where both firms are
private, internal production costs, market entry and the role of strategic precommitment. Within the section on
optimal price policy we will see that average-cost pricing is dominated by marginal-cost pricing from a public
firm's view. The section on regulation by participation suggests that typically better allocations are achieved in
the presence of public firms. De Fraja and Delbono (1989) give sufficient conditions such that the reverse result
turns out. The models on internal efficiency give an explanation why a public firm may produce at higher
average costs than a private firm. The last section on market entry explains why a public firm deters market entry
in a situation where a private firm does not. On the other hand it shows in how far a public firm is restricted in
entry deterrence. Finally we give a conclusion, reveal several possible ways for future research and the
difficulties which will arise in further theorizing on the subject.
Keywords:
JEL-Classification-Number:
Creation-Date: December 1991
Unfortunately this paper is not available. Please order a hardcopy via e-mail.
SFB 303 Homepage
12.10.1999, Webmaster