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Price-quantity-setting mixed duopoly models: market opening

Authors: Ferreira, Fernanda A.; Ferreira, Flávio;

Price-quantity-setting mixed duopoly models: market opening

Abstract

Usually, market models analyse competition between firms with either quantity or price as decision’s variables. This paper considers mixed duopoly competitions in which a state-owned public firm and a private firm produce complementary goods. We analyse, separately, the model in which the state-owned public firm sets the price and the private firm chooses the output production; and the model in which the state-owned public firm sets the output production and the private firm chooses the price. By considering domestic and international models, we analyse the effects of opening the market to a foreign firm. We also compare the results obtained with different types of decision variables. This paper contributes to the understanding of the implications of firms’ decisions on social welfare. As a result, the paper shows that, in the domestic competition, social welfare is higher when the state-owned public firm sets price and the domestic private firm sets production outputs than in other competitions. Furthermore, when the market is opened to foreign firms, social welfare is higher when both firms set prices than in other competitions.

Country
Portugal
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Keywords

Social welfare, Operations research, Market opening, Game theory

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selected citations
These citations are derived from selected sources.
This is an alternative to the "Influence" indicator, which also reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Citations provided by BIP!
popularity
This indicator reflects the "current" impact/attention (the "hype") of an article in the research community at large, based on the underlying citation network.
BIP!Popularity provided by BIP!
influence
This indicator reflects the overall/total impact of an article in the research community at large, based on the underlying citation network (diachronically).
BIP!Influence provided by BIP!
impulse
This indicator reflects the initial momentum of an article directly after its publication, based on the underlying citation network.
BIP!Impulse provided by BIP!
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