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MIXED OLIGOPOLY, PRODUCT DIFFERENTIATION AND COMPETITION FOR PUBLIC TRANSPORT SERVICES *
Author(s) -
CANTOSSÁNCHEZ PEDRO,
MONERCOLONQUES RAFAEL
Publication year - 2006
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/j.1467-9957.2006.00494.x
Subject(s) - duopoly , oligopoly , microeconomics , economics , product differentiation , profit (economics) , competition (biology) , social welfare , operator (biology) , industrial organization , cournot competition , ecology , biochemistry , chemistry , repressor , political science , transcription factor , gene , law , biology
This paper explores frequency and pricing decisions in a horizontally and vertically differentiated duopoly when there is competition between means of transport and where one of the firms need not necessarily maximize profits. The private and the mixed duopoly are compared and distortions from the social optimum are identified, both analytically and numerically. A mixed duopoly does not recover the socially optimal solution. However, the presence of a (public) non‐profit maximizing operator is a useful measure to get closer to the social optimum. When both operators are (private) profit maximizers, some control measures such as price caps and minimum service availability would reduce the distortions from the social optimum.