In a recent Joint Center study, David E. M. Sappington and J. Gregory Sidak argue that because public enterprises do not typically seek to maximize profits, incentives exist for those enterprises to undertake activities that disadvantage competitors. Those activities include setting prices below marginal cost, raising the operating costs of existing rivals, erecting entry barriers to preclude the operation of new competitors, and circumventing regulations designed to foster competition. This conference will examine why public enterprises often have stronger incentives to pursue those activities than do their private, profit-maximizing counterparts. This analysis has relevance to such public enterprises as the U.S. Postal Service, the Tennessee Valley Authority, the Bonneville Power Authority, Fannie Mae, Freddie Mac, and Amtrak.
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