arXiv
Open Access
2025
Luck Out or Outpay? Competing with a Public Option
Teddy Mekonnen
Abstrak
This paper analyzes the strategic interactions between a profit-maximizing monopolist and a free, capacity-constrained public option. By restricting its own supply, the monopolist intentionally congests the public option and induces rationing, which increases consumers' willingness to pay for guaranteed access. Counterintuitively, expanding the public option's capacity may raise the monopoly price and lower consumer welfare. However, I derive conditions under which all buyer types benefit from a capacity expansion, and extend these results to a setting where an oligopoly competes with a public option. These findings have implications for mixed public-private markets, such as housing, education, and healthcare.
Topik & Kata Kunci
Penulis (1)
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Teddy Mekonnen
Akses Cepat
Informasi Jurnal
- Tahun Terbit
- 2025
- Bahasa
- en
- Sumber Database
- arXiv
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- Open Access ✓