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.

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.

• Item Type: MPRA Paper
• Language: English
• Keywords: Mixed duopoly model; Price competition; Subsidization
• Subjects: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games; D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior: Theory; L - Industrial Organization > L3 - Nonprofit Organizations and Public Enterprise > L32 - Public Enterprises ; Public-Private Enterprises

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