EconPapers    
Economics at your fingertips  
 

Mixed duopoly with foreign firm and subcontracting

Yuanzhen Lyu and Jie Shuai ()

International Review of Economics & Finance, 2017, vol. 49, issue C, 58-68

Abstract: We consider a Hotelling model, in which a public firm competes with a foreign firm, at the mean time cooperates with it through subcontracting. We find that when there exists subcontracting, the presence of a foreign firm raises social welfare. Comparing to competing with the domestic private firm, when the public firm competes with the foreign firm, social welfare is lower, but consumer welfare is higher. And a variation in firms’ costs or tariffs has no effect on either firm's location. Tariff on inputs raises domestic social welfare and government will charge an input tariff to the extent of costs difference. Tariff on final good has no effect on welfare but will raise prices and thus hurt consumers. Compared to no tariff at all, tariff on inputs alone raises retail prices, but tariffs on both inputs and final goods may reduce prices and raise consumer surplus.

Keywords: Mixed duopoly; Subcontracting; Foreign firm (search for similar items in EconPapers)
JEL-codes: L13 L32 L33 (search for similar items in EconPapers)
Date: 2017
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1059056016301368
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:49:y:2017:i:c:p:58-68

Access Statistics for this article

International Review of Economics & Finance is currently edited by H. Beladi and C. Chen

More articles in International Review of Economics & Finance from Elsevier
Bibliographic data for series maintained by Dana Niculescu ().

 
Page updated 2019-11-17
Handle: RePEc:eee:reveco:v:49:y:2017:i:c:p:58-68