Spatial competition in a mixed duopoly with one partially nationalized firm

This paper analyzes the effects of partial public ownership on product differentiation and social welfare in the framework of a mixed duopoly with spatial competition. It shows that unless the public ownership exceeds a critical level, maximal differentiation continues to hold and social welfare does not improve. However, both the critical level of ownership and the marginal effect of ownership on welfare vary between different types of the partially public firm, where the types relate to different decision making mechanisms. Next, when the partially public firm has higher production cost, it responds to nationalization less vigorously than the private firm.