The competitive strategies of mixed duopoly firms and government trade policy

This paper employs the non-cooperative mixed duopoly game model to probe into the output competitive strategies and government optimal trade policy of a state-owned public firm and a foreign private firm. This paper shows: The Stackelberg mode of when the domestic state-owned firm serves as leader while the foreign private firm as follower is the optimal competitive strategy mode for the firms. But as to the home government, to lay a heavy tariff on the import goods will be the optimal trade policy; and if the tariff being prohibitive, the trade policy will be harm to the whole social welfare.