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

¹ College of Economics, Nihon University, Tokyo, Japan

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.

KeywordsMixed DuopolyNetwork EffectPrice CompetitionQuantity Competition

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

Abstract

References (7)