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- Title
Comparing welfare and profit in quantity and price competition within Stackelberg mixed duopolies.
- Authors
Hirose, Kosuke; Matsumura, Toshihiro
- Abstract
We compare welfare and profits under price and quantity competition in Stackelberg mixed duopolies. Under public leadership, price competition always yields greater profits and welfare than quantity competition. By contrast, under private leadership, the result depends on the nationality of the private firm. When the private firm is domestic (foreign), welfare is greater under quantity (price) competition. However, private firms always earn more under price competition. Introducing the nonnegative profit constraint affects welfare ranking but not profit ranking. These results indicate that profit ranking is fairly robust to the time structure in Stackelberg mixed duopolies, but welfare ranking is not.
- Subjects
DUOPOLIES; ECONOMIC competition; PRICE cutting; PROFIT; PRICE wars; WELFARE economics
- Publication
Journal of Economics, 2019, Vol 126, Issue 1, p75
- ISSN
0931-8658
- Publication type
Article
- DOI
10.1007/s00712-018-0603-7