Capacity Choice in a Price-Setting Mixed Duopoly : The Relative Performance Approach *

Content Provider	Semantic Scholar
Author	Nakamura, Yasuhiko Saito, Masayuki
Copyright Year	2013
Abstract	This paper analyzes the capacity choice issue under a price-setting mixed duopoly with differentiated goods, when the objective function of the private firm is its relative profit. In this paper, we show that the public firm chooses over-capacity irrespective of the degree of product differentiation and the degree of importance of the relative performance of the private firm. In contrast, we find that the difference between the output and capacity levels of the private firm strictly depends on both the degree of product differentiation and the degree of importance of its relative performance. More precisely, the private firm chooses over-capacity when the degree of importance of its relative performance is high relative to the degree of product differentiation, whereas it chooses under-capacity otherwise.
File Format	PDF HTM / HTML
Alternate Webpage(s)	http://file.scirp.org/pdf/ME_2013043012450910.pdf
Language	English
Access Restriction	Open
Subject Keyword	Intuition Loss function Manufactured Supplies Nonprofit Organizations Optimization problem
Content Type	Text
Resource Type	Article