A biased firm in a market with complementary products. A note on the welfare effects

Abstract

We analyse a duopoly setting with complementary products, in which a firm has a bias about its absolute advantage. We show that the bias can internalize parts of the negative externality that the complementarity of goods creates implying a higher producer's surplus. Moreover, we analyse additional conditions, which lead to an increase in the consumer's surplus. Counterintuitively, we show that the presence of a bias can lead to a positive welfare effect.

A Robust Approach for Cooperation and Coopetition of Bio-Refineries Under Government Interventions by Considering Sustainability Factors

“…Costs are the production cost per unit of biofuel, the fixed set up cost of biorefineries, and the variable cost of production. To offer a production level, bio-refineries incur a variable cost 1 2 2 [59], and [60], where is referred to as the bio-refinery's variable cost factor, reflecting the efficiency of production. The higher the variable cost factor, the lower the production and the profit of the bio-refinery.…”