Debashis Pal

A Mixed Oligopoly in the Presence of Foreign Private Firms

In this paper, a mixed oligopoly model is considered in which a state-owned public firm competes with both domestic and foreign private firms. Previous articles on mixed oligopoly did not include foreign private firms. The effect on the equilibrium involves a lower price and a different allocation of production (relative to the case when all private firms are domestically owned). In addition, issues such as the effects of an open door policy allowing foreign firms to enter and the effects of foreign acquisition of domestic firms are discussed.

Mixed Oligopoly, Privatization, and Strategic Trade Policy

This paper investigates the effects of privatization in the presence of strategic trade policies within an international mixed oligopoly serving a single market. If the government uses a domestic production subsidy, then welfare is always increased with privatization, while the optimal subsidy falls. If the government uses an import tariff, privatization increases welfare over much of the parameter space. The optimal tariff, however, may rise or fall.

Endogenous timing in a mixed oligopoly

Abstract Endogenous order of moves is analyzed in a mixed oligopoly, where the firms first choose the timing for choosing their quantities. The results are strikingly different from those obtained in a corresponding oligopoly with all profit maximizing firms.

Does Cournot competition yield spatial agglomeration

Abstract Locations and quantities are chosen sequentially in spatial markets. Strikingly different location patterns emerge, depending on the shape of the market. In a circular city, firms locate equidistant from each other. In a linear city, firms agglomerate at the center.

Effects of indirect taxation in a mixed oligopoly

Abstract In a mixed oligopoly, an increase in tax (ad valorem or specific) does not change total output, but increases the output of the public firm and the tax revenue. Also, privatization may increase both tax revenue and welfare.

Spatial Cournot competition and agglomeration in a model of location choice

Abstract Consider a two-stage non-cooperative Cournot game with location choice involving n ⩾ 2 competing firms. There are spatially contiguous markets along the interval [0,1] with relative size of the markets described by a continuous density function φ(x). The demand function for each individual consumer is the same in each market. Each firm first selects the location of its facility and then selects the quantities to supply to the markets, so as to maximize its profit. Earlier works on Cournot competition in spatial models have shown, assuming that the consumers are distributed uniformly over the markets, that firms typically tend toward central agglomeration. This paper extends the previous work by establishing the robustness of the agglomeration equilibrium to a broad class of density functions. Derived here are conditions under which: (i) agglomeration of all n firms is an equilibrium, (ii) agglomeration of duopolists is the only equilibrium, and (iii) duopolists exhibit a dispersed equilibrium. Examples of partial agglomeration are also constructed.

Spatial competition among multi-store firms

Abstract The paper analyzes spatial Cournot competition among multi-store firms. It demonstrates that the complex problem of determining equilibrium store locations for competing multi-store firms can be approximated by a simple one, in which each firm behaves as a multi-store monopolist in choosing its store locations. A firm’s equilibrium store locations often coincide with its monopoly locations, and in general, converge to its monopoly locations as the demand grows larger. When the firms have an equal number of stores, the stores belonging to competing firms agglomerate at discrete points that coincide with each firm’s monopoly store locations.

On the Performance of Linear Contracts

We examine the ability of linear contracts to replicate the performance of optimal unrestricted contracts in the canonical moral hazard setting with a wealth constrained, risk averse agent. We find that in a broad class of environments, the principal can always secure with a linear contract at least 95% of the profit that she secures with an optimal unrestricted contract, provided the productivity of the agents effort is not too meager.

Upstream monopoly, downsteam competition and spatial price discrimination

Abstract Works on spatial competition with discriminatory pricing assume that the input market is competitive or, at least, that upstream input suppliers do not offer price schedules contingent on downstream location decisions. In the present paper it is assumed that an upstream monopoly sets the price of its output based on its observation of the locations chosen by the firms downstream. A complete characteri- zation of a subgame-perfect equilibrium is given. In particular, no equilibrium is efficient. Futhermore, the payoffs of the different firms in an equilibrium, point to an incentive shared by all of them for vertical integration.

Location Equilibrium for Cournot Oligopoly in Spatially Separated Markets

Consider a two-stage non-cooperative Cournot game with location choice involving n≥ 2 firms each with several facilities. There are m≥ 2 spatially separated markets constituting the vertices of a network. Each firm first selects the locations of their facilities and then selects the quantities to supply to the markets to maximize its profit. There exists a Nash equilibrium in the quantities offered by each firm at the markets. Furthermore, when the demand in each market is sufficiently large, each firm chooses to locate its facilities only at vertices. With linear demand in each market, there exists a Nash location equilibrium.