Optimal zoning of a mixed duopoly

Abstract

This paper studies the optimal zoning of amixed duopolywhen the objective function of the public firm is a weighted sum of its profits and social surplus.We find that a regulator may attain the optimal locations of both firms by restricting the location of the private firm only. There is no need to limit the location of the public firm. In contrast, in a private duopoly, the regulator needs to restrict the locations of both firms.