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Price-setting mixed duopoly, subsidization and the order of firms' moves: substitutive, independent and complementary goods

Ohnishi, Kazuhiro (2020): Price-setting mixed duopoly, subsidization and the order of firms' moves: substitutive, independent and complementary goods.

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Abstract

This study examines a price-setting mixed duopoly with production subsidies and demonstrates that under the optimal production subsidy of each of substitutive, independent and complementary goods, profits and economic welfare are respectively identical in the three regimes of (i) a public firm and a private firm simultaneously set prices, (ii) the public firm acts as a leader, and (iii) both firms act simultaneously as profit-maximizers.

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