Title

Subsidizing purchases of public interest products : a duopoly analysis under a subsidy scheme

Document Type

Journal article

Source Publication

Operations Research Letters

Publication Date

11-2017

Volume

45

Issue

6

First Page

543

Last Page

548

Publisher

Elsevier BV

Keywords

Public interest product, Subsidy, Duopoly, Competition

Abstract

We investigate a symmetric duopoly setting in which two manufacturers produce the traditional and public interest (PI) products under a government’s subsidy scheme. A higher subsidy can increase the sale of the PI product but reduce the sale of the traditional product. Then, we study an asymmetric setting in which a manufacturer produces one of the two products and the other manufacturer produces both products. The government’s optimal subsidy is increasing in the marginal externality of the PI product.

DOI

10.1016/j.orl.2017.08.003

Print ISSN

01676377

E-ISSN

18727468

Funding Information

Funding for this research was provided by: National Natural Science Foundation of China (71390330, 71261006, 71202114, 71461009), Science and technology project of Jiangxi Provincial Education Department (GJJ160436), General Research Fund (GRF) (LU13500015). {71390330, 71261006, 71202114, 71461009, GJJ160436, LU13500015}

Publisher Statement

Copyright © 2017 Elsevier B.V. Access to external full text or publisher's version may require subscription.

Full-text Version

Publisher’s Version

Recommended Citation

Luo, C., Leng, M., Tian, X. & Wang, S. (2017). Subsidizing purchases of public interest products: a duopoly analysis under a subsidy scheme. Operations Research Letters, 45(6), 543-548. doi: 10.1016/j.orl.2017.08.003

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