Mixed oligopoly and predatory public firms

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