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Public-Private Competition in Regulated Markets

Author

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  • Ziad Ghandour

Abstract

We analyse the effect of competition on quality provision in mixed markets, such as health care and education, where public and private providers coexist. We make two key assumptions about the public provider in such markets, namely that it faces a regulated price and is (partly) motivated. We find that increased competition has an a priori ambiguous effect on quality provided by the public provider, while the scope for a quality reduction by the private provider is larger. We also derive the first-best solution and show how it coincides with the Nash equilibrium of a private (symmetric) duopoly.

Suggested Citation

  • Ziad Ghandour, 2021. "Public-Private Competition in Regulated Markets," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 177(3), pages 299-336.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2021-0007
    DOI: 10.1628/jite-2021-0007
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    Cited by:

    1. Ghandour, Ziad & Siciliani, Luigi & Straume, Odd Rune, 2022. "Investment and quality competition in healthcare markets," Journal of Health Economics, Elsevier, vol. 82(C).
    2. Ziad Ghandour & Odd Rune Straume, 2022. "Optimal funding coverage in a mixed oligopoly with quality competition and price regulation," Journal of Economics, Springer, vol. 136(3), pages 201-225, August.

    More about this item

    Keywords

    mixed duopoly; quality competition; copay; altruism; welfare;
    All these keywords.

    JEL classification:

    • H4 - Public Economics - - Publicly Provided Goods
    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • L3 - Industrial Organization - - Nonprofit Organizations and Public Enterprise

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