Incentives for Anticompetitive Behavior by Public Enterprises

  title={Incentives for Anticompetitive Behavior by Public Enterprises},
  author={David E. M. Sappington and J. Gregory Sidak},
  journal={Review of Industrial Organization},
We examine the competitive behavior of a public enterprise thatdoes not seek solely to maximize its profit. We find that despite a reduced focus on profit, a publicenterprise may have stronger incentives to pursue anticompetitive activities than does a private,profit-maximizing firm. These activities include setting prices below marginal cost, raising theoperating costs of existing rivals, erecting entry barriers to preclude the operation of new competitors,and circumventing regulations… 
3 Citations
Pricing “Competitive” Postal Products
The US Postal Service (USPS) provides “market-dominant” services on an exclusive basis, e.g., first class mail, and “competitive” services in markets with rivals, e.g., parcel delivery. Rivals have