A Kaleckian model, featuring the complementarity of the public and private sectors and administered pricing of public-sector products, is developed to examine the impact of public enterprises on income distribution between the state, capital, and labor. Public-sector mark-up and relative size affect the macroeconomy via both supply (private-sector good price) and demand (public and private savings, monetary expansion), and the short- and medium-term distributional effects may be contradictory. Public-sector price subsidy schemes and the cyclical properties of the private mark-up determine the direction and magnitude of these effects
