Public Monopoly, Mixed Oligopoly and Productive Efficiency

In general, the introduction of competition into the public sector seems to lead to higher cost‐efficiency in service production. However, there are examples of substantial cost increases in some areas. In this paper, using a mixed oligopoly model, we investigate the effects of deregulation on the cost‐reducing incentives of a public firm. Our results show that a firm that is a public monopoly has greater incentive to conduct cost‐reducing investment than a public firm within mixed oligopoly market.