摘要
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This paper investigates the optimal behavior of a public firm in a mixed market
involving private firms and one public firm. Existing works show that
welfare-maximizing behavior by the public firm is suboptimal when the number
of firms is given exogenously. This paper also allows free entry of private
firms and find that, in contrast to the case with the fixed number of firms,
welfare-maximizing behavior by the public firm is always optimal in mixed
markets. Furthermore, this paper finds that mixed markets are better than
pure markets involving no public firm if and only if the public firm earns
nonnegative profits.
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