Mixed oligopoly and raising rivals' costs

Abstract We show that the presence of a welfare maximizing public firm in an oligopoly guarantees that no firm has an incentive to raise the costs of domestic private rivals. This represents another example of regulation by participation. There remains an incentive to raise the costs of the public firm and of foreign private rivals. We also explore which firms are most likely to have their costs raised and which firms are most likely to raise rivals' costs.