Public Firms Outcompete Profit-Driven Rivals in Mixed Markets, Boosting Social Welfare
The article looks at how companies decide whether to set prices or quantities in a mixed market with one public and one private firm. It finds that when the private firm cares a lot about doing better than its competitor, both firms are likely to compete on quantity rather than price. This is different from what happens when the private firm only cares about making the most money. The study shows that when firms are similar and the private firm wants to outperform the public one, they are more likely to compete on quantity.