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Arturo Garcia, Mariel Leal and Sang-Ho Lee
''Optimal policy mix in an endogenous timing with a consumer-friendly public firm''
( 2018, Vol. 38 No.3 )
This study considers a mixed duopoly with a consumer-friendly public firm and analyzes an endogenous timing game in the presence of output subsidy and emission tax. We find that regardless of the policy mix, the equilibrium of endogenous market structure is determined by the public firm's concern on consumer surplus. We also show that the optimal policy mix can attain the first-best allocation for social welfare only when both firms have symmetric payoffs, which results in simultaneous-move outcome.
Keywords: endogenous timing game; consumer-friendly public firm; emission tax; output subsidy
JEL: L2 - Firm Objectives, Organization, and Behavior: General
H2 - Taxation, Subsidies, and Revenue: General
Manuscript Received : Jun 19 2018 Manuscript Accepted : Aug 05 2018

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