Endogenous product substitutability strategy under duopoly

Wang, Chan; Nie, Pu‐yan; Cui, Ting

doi:10.1002/mde.3033

Cited by 8 publications

(6 citation statements)

References 33 publications

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“…While most literature assumes that product differentiation is obtained in a costless way, considers a model of costly product differentiation and obtains the result that the products are always more differentiated in the mixed duopoly under Cournot competition, while it may be reversed, depending on the differentiation costs under Bertrand competition. Wang et al (2019) also shows that investments to increase product differentiation improves social welfare.…”

Section: Literature Reviewmentioning

confidence: 97%

Public monopoly versus mixed oligopoly: product differentiation and social efficiency

Kim

2021

Economic Research-Ekonomska Istraživanja

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In this paper, we consider a mixed oligopoly market in which a public firm and private firms compete, in particular, in which private entrants are allowed to enter a monopoly market by a public incumbent who maximizes social welfare. It has been widely believed that the public firm has advantage over private firms because the former who maximizes social welfare can charge a lower price than the latter who maximizes its own profit. However, in a Hotelling model of product differentiation, we obtain the results that both the public firm and private firms charge the same price in equilibrium, and more importantly, that the equilibrium prices may rise as a result of competition, thereby lowering the consumer surplus, if the transportation cost is high enough. We also show that if a private firm enters the market by choosing its own degree of differentiation, it will prefer neither maximum differentiation nor minimum differentiation in the case that the public incumbent is myopic in the sense that it cannot anticipate entry as well as in the case that it is far-sighted enough to anticipate entry. This draws an important policy implication in the market of Korean housing guarantee services.

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Section: Literature Reviewmentioning

confidence: 97%

Public monopoly versus mixed oligopoly: product differentiation and social efficiency

Kim

2021

Economic Research-Ekonomska Istraživanja

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“…The situation of higher productivity of foreign enterprises is a foreign-leading Stackelberg competition. The inverse demand can be described as p i ¼ a À q i À rq j (Chen, Wang, & Chu, 2020;Spence, 1976;Wang et al, 2019), where p i and q i are the product price and output, respectively, for each producer; i ¼ 1, 2, and i ≠ j; rϵ 0,1 ½ is the product homogeneity (the greater the r, the smaller the product differentiation) and a is a positive constant. In addition, defining transportation cost rate as tϵ 0, 1 ð Þ, we assume the profits of Enterprises 1 and 2 as…”

Section: The Modelmentioning

confidence: 99%

Optimal trade policy and welfare in a differentiated duopoly

et al. 2022

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This study considers a differentiated duopoly, including domestic and foreign enterprises, in trade, analyzes the impacts of product differentiation and productivity variance on equilibrium results, and explores the optimal trade policy in different competition modes. We find that differentiated products can boost the supply of foreign enterprises in a Cournot competition. In a home‐leading Stackelberg duopoly, increasing tariffs decreases consumer surplus but improves the home country's social welfare. The optimum‐welfare tariff of a home‐leading Stackelberg duopoly cannot exceed that of the foreign‐leading Stackelberg duopoly. An easy or tight tariff policy can be optimal, depending on the parameters and duopoly modes.

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“…Moreover, γ = 0 stands for monopolization role of two firms in two products, and γ = 1 manifests the identical products. To simplify the model, this article adopts linear demand function, which is generally adopted in economic field (Chen et al, ; Wang, Nie, & Cui, ).…”

Section: Model Establishmentmentioning

confidence: 99%

Innovation subsidy under duopoly

et al. 2020

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Innovation plays extremely important roles in the society, and underinvestment in innovation popularly exists. This article aims to capture innovative subsidy with game theory model. First, unilateral subsidy stimulates both innovation and outputs of subsidized firms, while it deters those of opponents. Second, under innovation subsidy, relationship between subsidized firm's innovation and product substitutability satisfies a U shape. For opponents, it is also a U‐shaped relationship. Third, under unilateral subsidy, subsidizing high‐efficiency firms yields more innovation than subsidizing low‐efficiency firms. Finally, bilateral subsidy stimulates more innovation than unilateral subsidy. This study supports theory to subsidize innovation efficiently.

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Endogenous product substitutability strategy under duopoly

Cited by 8 publications

References 33 publications

Public monopoly versus mixed oligopoly: product differentiation and social efficiency

Public monopoly versus mixed oligopoly: product differentiation and social efficiency

Optimal trade policy and welfare in a differentiated duopoly

Innovation subsidy under duopoly

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