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Jorge Fernández-Ruiz
''Capacity choice in a mixed duopoly with a foreign competitor''
( 2012, Vol. 32 No.3 )
This paper analyzes a mixed duopoly in which a public firm and a (possibly partially) foreign-owned firm choose their capacity scales before competing in quantities. We show that the private firm chooses over-capacity, as in previous literature, except if it is completely foreign-owned. In this polar case, the private firm chooses the cost-minimizing capacity scale. We also show that the change in the nationality of the private firm does not essentially alter the public firm's choice, since this firm chooses under-capacity if products are substitutes and over-capacity if they are complements, just as it does when it faces a domestic competitor.
Keywords: Mixed Oligopoly, Capacity Choice, Foreign Firm, Public Firm,
JEL: L1 - Market Structure, Firm Strategy, and Market Performance: General
L3 - Nonprofit Organizations and Public Enterprise: General
Manuscript Received : Jun 08 2012 Manuscript Accepted : Sep 25 2012

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