Government decisions boost profits for firms in mixed markets.
The article compares how companies compete in markets where they set prices or quantities. The government controls one company and aims to maximize overall welfare. In these mixed markets, all companies make more money when they compete by setting quantities (Cournot) rather than prices (Bertrand). This is different from a previous study that looked at a similar market. In markets with only two companies, they make the same amount of money whether they compete by setting prices or quantities.