Endogenous market structures in a mixed oligopoly with a public firm whose managerial contract is based on welfare and bargaining over the managerial contract of a private firm

In this research, we propose a stochastic model with the finite horizon of time for sales competition between the state-owned company and private (foreign) competitor. We assume that the foreign company objective function is to maximize revenues and the state-owned agent is concerned about welfare maximization. There are many stochastic models for sales, but what is new in our case is that we assume mixed oligopoly and have different types of firms: private and state owned. They have somewhat different objective functions. As a control variable, we take the advertisement expenses of the private firm. Sale bursts rate depends and the advertisement expenditure and experience stock gained. For the public firm, we assume that advertising efforts are fixed. It means that the optimal control is to maximize private firm revenues taking into account possible uncertainties of stochastic profit flow using Bellman’s optimality condition. We can find out that the Advertisement-Experience (AE) efforts of the private firm are increasing if sales are increasing. Next, the AE might decrease if the experience level of the private firm increases and we have a sales burst. To optimize the governmental policies, we check for optimal AE effort of the public firm so the social welfare achieves the maximum value.

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How Does Better Access to Public Firm Disclosures Affect Private Firm Financing?

SSRN Electronic Journal ◽

10.2139/ssrn.3978187 ◽

2021 ◽

Author(s):

Shawn Shi

Keyword(s):

Private Firm ◽

Firm Financing ◽

Public Firm

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International Tariffs in a Mixed Oligopoly with Research Spillovers

Peace Economics Peace Science and Public Policy ◽

10.1515/peps-2016-0007 ◽

2016 ◽

Vol 22 (3) ◽

pp. 277-293

Author(s):

Shoji Haruna ◽

Rajeev K. Goel

Keyword(s):

Industrial Organization ◽

Research And Development ◽

Technical Change ◽

Large Range ◽

Policy Implications ◽

Mixed Oligopoly ◽

Private Firms ◽

Second Stage ◽

Public Firm ◽

Mixed Oligopolies

AbstractThis paper merges three strands of the literature – industrial organization, international trade, and economics of technical change – to examine the effect of tariffs on international mixed oligopolies which conduct research and development (R&D) that is prone to spillovers. Mixed oligopolies are prevalent in the defense sector, among other sectors. Using a two-stage sequential game with R&D in the first stage and production in the second stage, results show that higher tariffs reduce outputs of both the domestic public firm and foreign private firms, and private R&D. Effects on domestic R&D and welfare, and profits of foreign private firms depend upon spillovers. Within a large range of research spillovers, higher tariffs can in fact lower welfare. Some of these findings are different from traditional oligopolies and from models that ignore research spillovers. Policy implications are discussed.

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