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Journal of Applied Nonlinear Dynamics 7(3) (2018) 259--267 | DOI:10.5890/JAND.2018.09.004

Fernanda A. Ferreira; Flávio Ferreira

Applied Management Research Unit (UNIAG), School of Hospitality and Tourism - Polytechnic Institute of Porto, Vila do Conde, Portugal

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Abstract

We will consider two models describing certain market structures: (i) a domestic market in which a public firm (whose objective is to maximize social welfare) competes with two private firms (whose objective is to maximize their own profits); and (ii) an international market in which a domestic public firm competes with one domestic private firm and one foreign private firm. In both situations, firms decide simultaneously the price for their substitutable goods. We compare the maximum-revenue tariff with the optimum-welfare tariff, and also the other output equilibria obtained in each case. Furthermore, we also compare the results in the domestic competition with the ones in the international competition.

Acknowledgments

Authors thank to UNIAG, R&D unit funded by FCT - Portuguese Foundation for the Developmeent of Science and Technology, Ministry of Science, Technology and Higher Education, under the Project UID/GES/04752/2016.

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