Co-Production and Reversed Cream-Skimming in Quasi-markets
In this paper, we provide a very simple model to shed light on the issue of managed competition in mixed quasi-markets (i.e. regulated markets in which social and for-profit firms coexist). In doing this, we consider the literature on mixed oligopolies as a reasonable reference point and try to enrich it with the idea of quasi-market. Firstly, our results show that social firms serve the relatively richer portion of the population. Only relatively poor consumers buy units of service from the profit-oriented firm. Secondly, the socially-preferable form of managed competition is to introduce co-production practices and, hence, to raise profit-oriented firm’s production costs. The diffusion of co-production paradigms ensures maximal service quality and eliminates mark-up from the market.
Volume (Year): 120 (2012)
Issue (Month): 2 ()
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