Does timing of decisions in a mixed duopoly matter?

Abstract

We determine the endogenous order of moves in a mixed pricesetting duopoly. In contrast to the existing literature on mixed oligopolies we establish the payo equivalence of the games with an exogenously given order of moves if the most plausible equilibrium is realized in the market. Hence, in this case it does not matter whether one becomes a leader or a follower. We also establish that replacing a private firm by a public firm in the standard Bertrand-Edgeworth game with capacity constraints increases social welfare and that a pure-strategy equilibrium always exists.