Premium
MIXED OLIGOPOLY, SEQUENTIAL ENTRY, AND SPATIAL PRICE DISCRIMINATION
Author(s) -
HEYWOOD JOHN S.,
YE GUANGLIANG
Publication year - 2009
Publication title -
economic inquiry
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.823
H-Index - 72
eISSN - 1465-7295
pISSN - 0095-2583
DOI - 10.1111/j.1465-7295.2008.00134.x
Subject(s) - stackelberg competition , welfare , economics , oligopoly , variety (cybernetics) , microeconomics , social welfare , price discrimination , public economics , market economy , artificial intelligence , computer science , political science , law
This paper is the first to examine the welfare consequences of a public firm in a traditional model of spatial price discrimination. It demonstrates that when a private firm acts as a Stackelberg location leader, the presence of a public firm always improves welfare. Moreover, when three firms locate sequentially, the presence of a public firm improves social welfare unless it locates last. Thus, despite examining a variety of location timings, including simultaneous location, privatization never improves welfare and usually harms welfare. This conclusion differs from several currently in the literature in which privatization often improves welfare. ( JEL L13, L32, L33, L52)