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

Chunlin LUO; Mingming LENG; Xin TIAN; Shouyang WANG

doi:10.1016/j.orl.2017.08.003

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

Chunlin LUO, Mingming LENG^*, Xin TIAN, Shouyang WANG

^*Corresponding author for this work

FACULTY OF BUSINESS

Research output: Journal Publications › Journal Article (refereed) › peer-review

7 Citations (Scopus)

41 Downloads (Pure)

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.

Original language	English
Pages (from-to)	543-548
Number of pages	6
Journal	Operations Research Letters
Volume	45
Issue number	6
Early online date	16 Aug 2017
DOIs	https://doi.org/10.1016/j.orl.2017.08.003
Publication status	Published - Nov 2017

Funding

The first author (Chunlin Luo) was supported by the National Natural Science Foundation of China (Grant Nos. 71461009, 71261006), and Science and technology project of Jiangxi Provincial Education Department (No. GJJ160436). The second author (Mingming Leng) was supported by the General Research Fund (GRF) of the Hong Kong Research Grants Council under Research Project No. LU13500015. The third and fourth authors (Xin Tian and Shouyang Wang) were partially supported by the National Natural Science Foundation of China (Nos. 71390330, 71202114).

Keywords

Competition
Duopoly
Public interest product
Subsidy

Access to Document

10.1016/j.orl.2017.08.003

Subsidy-Accepted-2017-08-02Accepted author manuscript, 122 KBLicence: CC BY-NC-ND

Cite this

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title = "Subsidizing purchases of public interest products : a duopoly analysis under a subsidy scheme",

abstract = "We investigate a symmetric duopoly setting in which two manufacturers produce the traditional and public interest (PI) products under a government{\textquoteright}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{\textquoteright}s optimal subsidy is increasing in the marginal externality of the PI product.",

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AU - LENG, Mingming

AU - TIAN, Xin

AU - WANG, Shouyang

PY - 2017/11

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N2 - 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.

AB - 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.

KW - Competition

KW - Duopoly

KW - Public interest product

KW - Subsidy

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U2 - 10.1016/j.orl.2017.08.003

DO - 10.1016/j.orl.2017.08.003

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EP - 548

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JF - Operations Research Letters

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ER -

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

Abstract

Funding

Keywords

Access to Document

Other files and links

Policy Optimization for Product Returns: A Decision-Theoretic Approach (产品退货政策优化: 一个决策理论的方法)

Cite this

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

Abstract

Funding

Keywords

Access to Document

Other files and links

Projects

Policy Optimization for Product Returns: A Decision-Theoretic Approach (产品退货政策优化: 一个决策理论的方法)

Cite this