We study the competition between a private firm and public firms on prices and
investment in new infrastructures. While the private firm maximizes its profits,
public firms maximize the sum of their profits and consumer surplus, subject to a
budget constraint. We consider two scenarios of public intervention, with a national
public firm and with local public firms. In a monopoly benchmark, we find that the
national public firm has the highest coverage and charges a uniform price allowing
cross-subsidies between high-cost and low-cost areas. Moreover, the private firm
covers as much as local public firms. In a mixed duopoly, a stronger competitive
pressure drives firms’ prices up while it drives down (up) the national public (private)
firm’s coverage.