Co-Production and Reversed Cream-Skimming in Quasi-markets
| RIVISTA INTERNAZIONALE DI SCIENZE SOCIALI - 2012 - 2
In this paper, we provide a very simple model to shed light on the issue of managed competition
in mixed quasi-markets (i.e. regulated markets in which social and for-profit firms coexist). In
doing this, we consider the literature on mixed oligopolies as a reasonable reference point and try
to enrich it with the idea of quasi-market. Firstly, our results show that social firms serve the relatively
richer portion of the population. Only relatively poor consumers buy units of service from
the profit-oriented firm. Secondly, the socially-preferable form of managed competition is to introduce
co-production practices and, hence, to raise profit-oriented firm’s production costs. The diffusion
of co-production paradigms ensures maximal service quality and eliminates mark-up from the
Keywords: Quasi-Markets, Competition, Regulation, Mixed Oligopoly, Social Firm.
JEL Classification: I18, L13, L84.