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"Mixed oligopoly and predatory public firms"

Author

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  • Joan-Ramon Borrell

    (Universitat de Barcelona, Institut d'Economia Aplicada (IREA) - Grup de Governs i Mercats (GiM); and, University of Navarra, IESE Business School, Public-Private Sector Research Center.)

  • Carlos Suarez

    (Universidad Jorge Tadeo Lozano, Grupo de Investigación en Energía, Ambiente y Desarrollo Sostenible; Universitat de Barcelona, Institut d'Economia Aplicada (IREA) - Grup de Governs i Mercats (GiM).)

Abstract

In this paper, we propose a mixed duopoly model in which the public company aims to maximize a weighted function of profits and a function of its production scale. We found that if the weight to the scale of production is high the public firms may exclude its rivals from the market (exercising predatory prices). We also find that the profit sacrifice by the public firm to get this exclusion is higher if there are marked differences between the cost efficiency of private and public firms.

Suggested Citation

  • Joan-Ramon Borrell & Carlos Suarez, 2021. ""Mixed oligopoly and predatory public firms"," IREA Working Papers 202116, University of Barcelona, Research Institute of Applied Economics, revised Sep 2021.
    • Handle: RePEc:ira:wpaper:202116
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    File URL: http://www.ub.edu/irea/working_papers/2021/202116.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Mixed Oligopoly; Predatory prices; Public firm. JEL classification: L13; L94; C10.;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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