[Journal:] Scottish Journal of Political Economy [ISSN:] 1467-9485 [Volume:] 67 [Issue:] 4 [Pages:] 448-453
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.