Reaction Functions under Quantity Competition in International Mixed Triopolies

Abstract

This paper considers an economy in which a state-owned public firm, a domestic private firm and a foreign private firm compete in output levels. The paper examines the firms’ reaction functions in the economy. As a result of this analysis, the paper shows that there is a mixed triopoly in which the state-owned public firm acts as a strategic complementor to the domestic private firm’s output, that is, its reaction function is upward sloping.

Keywords

• reaction functions
• quantity competition
• state-owned public firm
• domestic private firm
• foreign private firm