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Price-setting mixed duopoly, subsidization and the order of firms’ moves: an irrelevance result

Ohnishi, Kazuhiro (2020): Price-setting mixed duopoly, subsidization and the order of firms’ moves: an irrelevance result.

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Abstract

This paper examines price-setting duopoly games with production subsidies and shows that the optimal production subsidy, profits and economic welfare are identical irrespective of whether (i) a public firm and a private firm simultaneously and independently set prices, (ii) the public firm acts as a Stackelberg leader, or (iii) both firms behave as profit-maximizers.

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