Abstract
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.
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