Private provision of price excludable public goods by rivals

Abstract

We uniquely study the private provision of price excludable public goods in a duopoly. Simultaneous price competition generates only a mixed strategy equilibrium. Price leadership generates a pure strategy equilibrium with the leader setting a lower price and serving most consumers. This leadership game is the endogenous timing choice and improves welfare relative to monopoly provision. We re-examine these results under production in advance. The leadership game no longer remains a unique timing choice but the profit under production in advance is strictly larger.