Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/213553 
Authors: 
Year of Publication: 
2019
Series/Report no.: 
EERI Research Paper Series No. 12/2019
Publisher: 
Economics and Econometrics Research Institute (EERI), Brussels
Abstract: 
The purpose of this paper is to analyze the role of the public firm in a spatial duopoly model a la Hotelling in the case of a low willingness to pay. We find that the presence of a public firm has the well known regulatory function in a market with a relative high willingness to pay; it is irrelevant in a market with a medium level of the willingness to pay; the relevance is for a low willingness to pay, where it ensures the full market coverage (as a result of the standard welfare maximization); finally, if the willingness to pay is very low, the public firm ensures a higher, but not full, market coverage with respect to the pure private case. Finally, we find that, for a low willingness to pay, the presence of the public firm is not sufficient to guarantee the optimal market configuration, so that the efficient level of welfare.
Subjects: 
Mixed duopoly
full market coverage
low willingness to pay
efficient welfare
JEL: 
L13
C72
D71
Document Type: 
Working Paper

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