Mixed duopolies with advance production

Abstract

Production to order and production in advance have been compared in many frameworks. In this paper we investigate a production in advance version of the capacity-constrained Bertrand-Edgeworth mixed duopoly game and determine the solution of the respective timing game. We show that a pure-strategy (subgameperfect) Nash-equilibrium exists for all possible orderings of moves. It is pointed out that unlike the production-to-order case, the equilibrium of the timing game lies at simultaneous moves. An analysis of the public firm’s impact on social surplus is also carried out. All the results are compared with those of the production-to order version of the respective game and with those of the mixed duopoly timing games.