Public Firms Can Boost Social Welfare by Choosing Prices or Quantities
The article explores how companies compete when some are private and some are public, and they can choose between setting prices or quantities while dealing with labor unions. When products are similar, competition based on prices tends to benefit society more if the products are somewhat different, whereas competing based on quantities benefits society more if the products are very similar. This means that the public company in the mix has choices to make depending on how similar their products are to the others. In some situations, the best choice for the public company can lead to more social welfare, which is like everyone being better off together. So, depending on how much the products are alike, different ways of competing can change how well everyone does.