A Note on the Bounded Solution of the Bilateral Monopoly Model

As is well known in the bilateral monopoly model, the solution regarding the price of the intermediate product cannot be determined uniquely. In this note, the author proposes a new solution that has narrower solution bound than that suggested by J. M. Henderson and R. E. Quandt (1971). Furthermore, these solutions are shown to be special cases of a generalized goal programming model with conflicting objectives between two monopolists. It was shown that with more information on taxes or preference weights, the solution range can be greatly improved.