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Abstract
We investigate Cournot and Stackelberg mixed duopoly models where a state-owned public firm maximizing domestic social surplus, and a foreign firm searching to maximize its own profit, compete. First, we establish the existence and uniqueness results for the Cournot scheme, and propose the agents’ classification as strong or weak according to the agent's optimal reaction function properties at the Cournot equilibrium. Then we examine a desirable role (either leader or follower) of both firms in the Stackelberg schemes and compare the profits and domestic social surplus and the production volumes at each type of Stackelberg equilibrium.
Acknowledgements
This research was supported by the Mexico National Council on Science and Technology (CONACyT) within the project SEP-2004-C01-45786; the work of the first and the second author was also supported with the Department of Research in Logistics (Cátedra de Investigación) CAT-025 of the Tecnológico de Monterrey; the work of the first author was supported by the Russian Humanitary Science Foundation (RGNF) grant no. 08-02-00271; the work of the third author was also supported by Cuerpo Académico of the Department of Civil Engineering and Architecture (FICA) of the University of Durango (UJED). The authors also express their profound gratitude to an anonymous referee for the valuable comments and remarks that have helped to improve the manuscript.