Policy objectives and performance in a mixed market with bargaining

We analyse a mixed duopoly in which wages and salaries are determined by Na sh bargaining and where the public firm's unit costs depend on its objectiv es. Because of constant returns to scale, welfare maximisation without rest riction would eliminate or significantly weaken the private firm. Therefore , we focus on constrained welfare maximisation, in which case unit costs ar e normally higher in the public firm. On the other hand, the private firm m ay even earn more than in a monopoly if the public firm maximises profits o r if the constraint offers too much protection. (C) 1999 Elsevier Science B N. All rights reserved.