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Comparing welfare and profit in quantity and price competition within Stackelberg mixed duopolies

Kosuke Hirose () and Toshihiro Matsumura ()
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Kosuke Hirose: The University of Tokyo

Journal of Economics, 2019, vol. 126, issue 1, 75-93

Abstract: 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.

Keywords: Public leadership; Private leadership; Mixed markets; Cournot–Bertrand comparison (search for similar items in EconPapers)
JEL-codes: H42 H44 L13 L32 (search for similar items in EconPapers)
Date: 2019
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Working Paper: Comparing Welfare and Profit in Quantity and Price Competition within Stackelberg Mixed Duopolies (2017) Downloads
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