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Social Welfare under Quantity Competition and Price Competition in a Mixed Duopoly with Network Effects: An Analysis

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DOI: 10.4236/tel.2013.34035    4,354 Downloads   6,536 Views   Citations

ABSTRACT

In their recent work, Matsumura and Ogawa (2012) showed that in the context of a mixed duopoly, equilibrium social welfare is higher in price-setting competition than in quantity-setting competition. We found that when the strength of network effects is sufficiently high, the above result is totally reversed; thus, in a mixed duopoly, the presence of network effects weakens the superiority of price-setting competition with respect to equilibrium social welfare.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

Y. Nakamura, "Social Welfare under Quantity Competition and Price Competition in a Mixed Duopoly with Network Effects: An Analysis," Theoretical Economics Letters, Vol. 3 No. 4, 2013, pp. 211-215. doi: 10.4236/tel.2013.34035.

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