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.
Cite this paper
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