Effects of capacity constraints on mixed duopoly

This paper highlights the mixed duopoly substitutable product with an upstream input subject to capacity constraints. The effects of capacity constraints on the mixed economy are captured. Firstly, the degree of public ownership improves the firm size difference, the price difference, the price dispersion and consumer surplus, while it reduces the price and the second firm’s profits. Secondly, the efficiency difference reduces the firm size difference, the price difference and the price dispersion. Finally, under scarce capacity, the relationship between the total capacity and, the firm size difference, the price difference and the price dispersion, depends on the efficiency of the two firms. Copyright Springer-Verlag Wien 2014