Price Competition in a Mixed Oligopoly Market

Abstract

Several studies on mixed oligopoly indicate that the ownership

pattern of firms does not affect the equilibrium price. This idea often

suggests that ownership is irrelevant. In a mixed duopoly under

price competition, firm ownership is irrelevant. This study reveals

that ownership is irrelevant in a single publicly owned firm and in

any positive number of privately owned firms. However, if two or

more publicly owned firms exist, then ownership becomes relevant

in a homogeneous good market with a strictly increasing convex

cost schedule and a downward sloping demand curve. If firms set

the price sequentially and if the lone public firm is a price leader,

then social welfare is constantly greater than when the latter is a

price follower. The unique price is the competitive price when the

public firm moves first in the sequential game.