Incentives for Anticompetitive Behavior by Public Enterprises

24 Pages Posted: 4 Aug 2003 Last revised: 2 Nov 2009

See all articles by David E. M. Sappington

David E. M. Sappington

University of Florida - Department of Economics; National Bureau of Economic Research (NBER)

J. Gregory Sidak

Criterion Economics, L.L.C.

Date Written: 2003

Abstract

We examine the competitive behavior of a public enterprise that does not seek solely to maximize its profit. We find that despite a reduced focus on profit, a public enterprise may have stronger incentives to pursue anticompetitive activities than does a private, profit-maximizing firm. These activities include setting prices below marginal cost, raising the operating costs of existing rivals, erecting entry barriers to preclude the operation of new competitors, and circumventing regulations designed to foster competition.

Keywords: public enterprises, anticompetitive activities, barriers to entry, setting prices, marginal cost, anticompetitive behavior

JEL Classification: L44, H10, K21

Suggested Citation

Sappington, David E. M. and Sidak, J. Gregory, Incentives for Anticompetitive Behavior by Public Enterprises (2003). Review of Industrial Organization, Vol. 22, pp. 183-206, 2003. Available at SSRN: https://ssrn.com/abstract=269489 or http://dx.doi.org/10.2139/ssrn.269489

David E. M. Sappington (Contact Author)

University of Florida - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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J. Gregory Sidak

Criterion Economics, L.L.C. ( email )

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Washington, DC 20006
United States
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HOME PAGE: http://www.criterioneconomics.com

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