Free Entry into a Co-opetitive Mixed Oligopoly

We investigate the socially desirable number of entrants in a free-entry co-opetitive mixed market. Our study simulates a public firm and private firm engaging in Cournot competition with a homogeneous good while sharing common property resources that affect industry-wide demand. To this end, we introduce a strategic commitment competition stage between market entry and production, where firms pursue demand-enhancing investments. We find that the relationship between the number of firms entering and the profit of incumbent private firms is nonmonotonic (inverted U-shape) when the investment cost parameter is sufficiently small. Moreover, free private firm entry can lead to either socially excessive or insufficient entry. JEL Code: C72, L13, L33