Price-Setting Mixed Duopoly Models with Complementary Goods

Kazuhiro Ohnishi

doi:10.4236/me.2010.11003

Abstract

This paper considers domestic (resp. international) Bertrand mixed duopoly competition in which a state-owned welfare-maximizing public firm and a domestic (resp. foreign) profit-maximizing private firm produce complementary goods. The main purpose of the paper is to present and to compare the equilibrium outcomes of the two mixed duopoly models.

Highlights

The analysis of mixed market models that incorporate state-owned welfare-maximizing public firms has received considerable attention in recent years and has been widely performed by many researchers
This paper considers domestic Bertrand mixed duopoly competition in which a stateowned welfare-maximizing public firm and a domestic profit-maximizing private firm produce complementary goods
We see that since the state-owned firm’s profit is zero, social welfare is equal to consumer surplus

Summary

Introduction

The analysis of mixed market models that incorporate state-owned welfare-maximizing public firms has received considerable attention in recent years and has been widely performed by many researchers. We analyze the behavior of a state-owned public firm and a foreign private firm in an international price-setting model with complementary goods. We consider both domestic and international mixed duopoly models with complementary goods. We present the equilibrium outcome of the domestic Bertrand mixed duopoly model with complementary goods.

Domestic Mixed Duopoly with Complementary Goods

International Mixed Duopoly with Complementary Goods

Comparisons

Findings

Conclusions