Location of public and private firms under endogenous timing of choices

This paper studies the choices of locations in a mixed duopoly when production costs are endogenously determined and the public firm maximizes a weighted sum of social surplus and its profits. We find that the locations of the two firms are decided simultaneously when the weight of the public firm’s profits in its objective function is high enough. When this is not the case we find that one firm (not always the public firm but sometimes also the private one) behaves as a leader in the choice of location and location decisions are made sequentially. Moreover, in equilibrium, the production cost of the public firm is never higher than that of the private firm.