Time-Based Competition and the Privatization of Services

Rune Steinbacka and Mihkel M Tombak

Journal of Industrial Economics, 1995, vol. 43, issue 4, 435-54

Abstract: The authors develop a vertical differentiation model which exhibits congestion externalities and in which firms choose service time. This model is formulated for a variety of industry and ownership structures. The authors find an ownership effect in which service speeds decrease when public services are privatized. This effect, however, could be offset and even reversed by increased efficiency of private services. The authors also investigate how prices and commitment ability with respect to service times will affect the service speeds in equilibrium. Copyright 1995 by Blackwell Publishing Ltd.

Date: 1995
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