TITLE:
Social Welfare under Quantity Competition and Price Competition in a Mixed Duopoly with Network Effects: An Analysis
AUTHORS:
Yasuhiko Nakamura
KEYWORDS:
Mixed Duopoly; Network Effect; Price Competition; Quantity Competition
JOURNAL NAME:
Theoretical Economics Letters,
Vol.3 No.4,
July
17,
2013
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.