My First Paper in Industrial Organization

hen I started this blog I thought not to share too personal things. However this is an exception. My first paper in industrial organization with my advisor John Heywood is accepted for publication and now is in press. It is titled: “Mixed Oligopoly in a Single International Market.” Here is its abstract:

It departs from previous literature by considering a mixed oligopoly with two countries each with public and private firms competing in a single market. This differs from the traditional framework of examining a single domestic market in which foreign and domestic firms compete and is motivated, in part, by international airline markets but serves to characterize many markets. The resulting equilibrium emphasizes that the strategic interaction of the two public firms usually serves to reduce welfare. Thus, the usual reason to imagine a public firm in a mixed oligopoly, to enhance welfare, is lost when such firms compete in the interest of their respective countries.

For me the most interesting finding of this paper is the fact that countries sometimes are locked in a prisoners’ dilemma, should they choose to do so unilaterally in regional markets they would suffer a decline in social welfare. This explains the reluctance of several governments to carry on liberalization policies when public firms act as trade strategical instruments.

Paper is forthcoming in Australian Economic Papers.

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