A biased firm in a market with complementary products. A note on the welfare effects

We analyse a duopoly setting with complementary products, in which a firm has a bias about its absolute advantage. We show that the bias can internalize parts of the negative externality that the complementarity of goods creates implying a higher producer's surplus. Moreover, we analyse additional conditions, which lead to an increase in the consumer's surplus. Counterintuitively, we show that the presence of a bias can lead to a positive welfare effect.

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Year of publication:	2019
Authors:	Buchen, Clemens ; Palermo, Alberto
Published in:	Scottish Journal of Political Economy. - Hoboken, NJ : Wiley, ISSN 1467-9485. - Vol. 67.2019, 4, p. 448-453
Publisher:	Hoboken, NJ : Wiley
Subject:	Bias \| complementary products \| oligopoly

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Type of publication:	Article
Type of publication (narrower categories):	Article
Language:	English
Other identifiers:	10.1111/sjpe.12236 [DOI] hdl:10419/230022 [Handle]
Source:	EconStor

Persistent link: https://www.econbiz.de/10012428631