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On the output and welfare effects of a non-profit firm in a mixed duopoly: A generalization

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  • Flores, Daniel
  • García, Arturo

Abstract

We study the output and welfare impacts of a non-profit firm in a mixed duopoly. In particular, we show that technical efficiency at the margin is crucial to determine whether the social responsibility of the non-profit firm increases or reduces welfare, assuming general demand and cost functions. This implies the paradoxical result that more social responsibility may reduce welfare. In addition, we introduce the concept of technical advantage in production and apply it to the study of a mixed duopoly considering convex-quadratic cost functions. Interestingly, a firm may have a technical advantage in production and at the same time be technically less efficient than its rival at the margin. We show that the paradox eventually occurs as the non-profit firm exhibits more social responsibility if firms have quadratic cost functions. This can happen even if the non-profit firm has a substantial technical advantage over its rival.

Suggested Citation

  • Flores, Daniel & García, Arturo, 2016. "On the output and welfare effects of a non-profit firm in a mixed duopoly: A generalization," Economic Systems, Elsevier, vol. 40(4), pages 631-637.
    • Handle: RePEc:eee:ecosys:v:40:y:2016:i:4:p:631-637
    DOI: 10.1016/j.ecosys.2016.02.008
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    References listed on IDEAS

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    Cited by:

    1. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2017. "Effects of globalizing a consumer-friendly firm into an asymmetric mixed duopoly," MPRA Paper 83512, University Library of Munich, Germany.
    2. Leal, Mariel & Garcia, Arturo & Lee, Sang-Ho, 2018. "The Timing Of Environmental Tax Policy With A Consumer-Friendly Firm," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(1), pages 25-43, June.
    3. Ohnishi, Kazuhiro, 2022. "Wage-rise contract and mixed Cournot duopoly competition with profit-maximizing and socially concerned firms," MPRA Paper 112536, University Library of Munich, Germany.
    4. Mariel Leal & Arturo García & Sang-Ho Lee, 2021. "Sequencing R&D decisions with a consumer-friendly firm and spillovers," The Japanese Economic Review, Springer, vol. 72(2), pages 243-260, April.
    5. Ohnishi, Kazuhiro, 2022. "Socially concerned duopolies with lifetime employment as a strategic commitment," MPRA Paper 111625, University Library of Munich, Germany.
    6. Chokri Aloui & Khaïreddine Jebsi, 2022. "Does corporate social responsibility solve the chicken‐and‐egg problem for a two‐sided platform?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3235-3256, October.
    7. Firoozi, Fathali & Lien, Donald, 2021. "Public Grants Awarded to Private Firms: A Mixed Duopoly Analysis," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 90-96.
    8. Mariel Leal & Arturo García & Sang-Ho Lee, 2020. "Effects of Integration with a Consumer-Friendly Firm in a Cournot Duopoly," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 587-604, September.
    9. Seung-Leul Kim & Sang-Ho Lee & Toshihiro Matsumura, 2019. "Corporate social responsibility and privatization policy in a mixed oligopoly," Journal of Economics, Springer, vol. 128(1), pages 67-89, September.
    10. Cho, Sumi & Lee, Sang-Ho, 2017. "Endogenous Private Leadership under Subsidy Policy on the Social Enterprises," MPRA Paper 83431, University Library of Munich, Germany.
    11. Ohnishi, Kazuhiro, 2023. "Why firms should care for consumers: Complementary goods," MPRA Paper 117305, University Library of Munich, Germany.
    12. Ohnishi, Kazuhiro, 2021. "Lifetime employment and reaction functions of socially concerned firms under quantity competition," MPRA Paper 110867, University Library of Munich, Germany.

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    More about this item

    Keywords

    Mixed duopoly; Non-profit firm; Output; Welfare;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship

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