ENDOGENOUS TIMING IN A MIXED DUOPOLY WITH CAPACITY CHOICE

An endogenous order of moves is analyzed in a mixed duopoly where firms first strategically choose their capacity levels and then compete at price level. In equilibrium, firms are shown to set prices simultaneously while capacities are chosen sequentially. This result is in contrast to the assumption of simultaneous order of moves for capacities choice made by Bárcena‐Ruiz and Garzón (Economics Bulletin, Vol. 12 (2007), pp. 1–7) in a mixed duopoly. Besides, we find that there are two equilibria: in one of them the public firm is the leader in capacities and, in the other, the follower.