Quantity Competition and Price Competition with a Duopoly in a Consumer-Friendly Firm: A Welfare AnalysisReport as inadecuate




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This paper conducts a welfare analysis in a duopoly withdifferentiated and substitutable goods composed of one consumer-friendly firmand one absolute profit maximizing firm. We suppose that the consumer-friendlyfirm maximizes the weighted sum of its absolute profit and consumer surplus. Insuch a duopoly, when the degree of product differentiation is sufficiently highand the weight that the consumer-friendly firm puts on consumer surplus in itsobjective function is sufficiently high, the equilibrium social welfare islarger in the quantity competition than in the price competition, which impliesthat the result is reverse of that obtained in the standard duopoly withsubstitutable goods composed of absolute profit maximizing firms.







KEYWORDS

Consumer-Friendly Firm; Degree of Product Differentiation; Extent of Importance of Consumer Surplus

Cite this paper

Y. Nakamura -Quantity Competition and Price Competition with a Duopoly in a Consumer-Friendly Firm: A Welfare Analysis,- Modern Economy, Vol. 4 No. 11, 2013, pp. 776-782. doi: 10.4236-me.2013.411082.





Author: Yasuhiko Nakamura

Source: http://www.scirp.org/



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