A politically connected public firm competes with a private one in a game of endogenous product differentiation. Consumers differ in their willingness to pay. Firms choose qualities and then prices. Finally, consumers buy one good. The public firm maximizes a combination of profits and the median voter's utility. I provide a political economy micro-foundation of this objective function. Then, I study the effects of partial privatization. I find that (i) privatization encourages the entry of the private firm; (ii) the public firm's profits may exceed those of its competitor; and (iii) the socially optimal degree of privatization is interior.
SING 2022 (online), EARIE 2022 (Wien), JEI 2022 (Las Palmas de Gran Canaria), NSEF PhD Workshop 2022 (Naples), University of Parma, MACCI 2023 (Mannheim), PhD EVS (online), HEC PhD Conference 2023 (Paris), SIEPI 2023 (Naples), Stony Brook International Conference on Game Theory 2023 (Stony Brook), Sapienza PhD Conference 2023, ASSET 2023 (Scheduled), SAEe 2023 (scheduled)
Different versions of this paper circulated with different titles.
Microeconomic Theory (TA)
Academic Years: 2021-2022; 2022-2023
Collegio Carlo Alberto
Prof. I. Monzón
Problem Sets Grading and Weekly Tutorials
Academic Year: 2021-2022
University of Turin (Management Department)