Mixed oligopoly and predatory public firms
Joan-Ramon Borrell () and
Carlos Suarez ()
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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).
No 202116, IREA Working Papers from University of Barcelona, Research Institute of Applied Economics
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.
Keywords: Mixed Oligopoly; Predatory prices; Public firm. JEL classification: L13; L94; C10. (search for similar items in EconPapers)
Pages: 24 pages
Date: 2021-09, Revised 2021-09
New Economics Papers: this item is included in nep-bec, nep-com, nep-cwa, nep-gth and nep-ind
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Persistent link: https://EconPapers.repec.org/RePEc:ira:wpaper:202116
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