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Mixed markets in bilateral monopoly

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  • Arup Bose
  • Barnali Gupta

Abstract

Should we expect to see patterns in the privatization of a public bilateral monopoly? To address this question, the paper analyzes the welfare implications of privatization and examines the interplay of firm location in the vertical stream, differential priorities on private and public profit in welfare and cost asymmetries in a mixed bilateral monopoly. We conclude that merely comparing cost savings from privatization upstream/downstream, is inadequate. If public profit is relatively insignificant in welfare, then only relative cost savings matter. However, if public profit is sufficiently important, then privatization downstream will maximize welfare if it is as (or more) cost effective compared to privatization upstream. We find that downstream privatization can be better than upstream privatization even when the latter is more cost effective than the former. Copyright Springer-Verlag Wien 2013

Suggested Citation

  • Arup Bose & Barnali Gupta, 2013. "Mixed markets in bilateral monopoly," Journal of Economics, Springer, vol. 110(2), pages 141-164, October.
    • Handle: RePEc:kap:jeczfn:v:110:y:2013:i:2:p:141-164
    DOI: 10.1007/s00712-012-0310-8
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    Cited by:

    1. Stefano Colombo, 2016. "Mixed oligopolies and collusion," Journal of Economics, Springer, vol. 118(2), pages 167-184, June.
    2. Bian, Junsong & Guo, Xiaolei & Li, Kevin W., 2015. "Distribution channel strategies in a mixed market," International Journal of Production Economics, Elsevier, vol. 162(C), pages 13-24.
    3. Marc Escrihuela-Villar & Carlos Gutiérrez-Hita, 2019. "On competition and welfare enhancing policies in a mixed oligopoly," Journal of Economics, Springer, vol. 126(3), pages 259-274, April.
    4. Liu, Qian & Wang, Leonard F.S. & Chen, Charlie L., 2019. "Upstream privatization in mixed markets with retailer's efforts," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 338-345.
    5. Corrado Benassi & Alessandra Chirco & Marcella Scrimitore, 2014. "Optimal manipulation rules in a mixed oligopoly," Journal of Economics, Springer, vol. 112(1), pages 61-84, May.
    6. Ningning Wang & Zhuoxin Li, 2021. "Supplier Encroachment with a Dual‐Purpose Retailer," Production and Operations Management, Production and Operations Management Society, vol. 30(8), pages 2672-2688, August.
    7. Toshihiro Matsumura & Makoto Okamura, 2015. "Competition and privatization policies revisited: the payoff interdependence approach," Journal of Economics, Springer, vol. 116(2), pages 137-150, October.
    8. Toshihiro Matsumura & Akira Ogawa, 2014. "Corporate Social Responsibility or Payoff Asymmetry? A Study of an Endogenous Timing Game," Southern Economic Journal, John Wiley & Sons, vol. 81(2), pages 457-473, October.
    9. Björn Brand & Michael Grothe, 2015. "Social responsibility in a bilateral monopoly," Journal of Economics, Springer, vol. 115(3), pages 275-289, July.
    10. Bárcena-Ruiz, Juan Carlos & Garzón, María Begoña, 2018. "Privatisation and vertical integration under a mixed duopoly," Economic Systems, Elsevier, vol. 42(3), pages 514-522.
    11. Ritika Jain & Rupayan Pal, 2012. "Mixed duopoly, cross-ownership and partial privatization," Journal of Economics, Springer, vol. 107(1), pages 45-70, September.

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    More about this item

    Keywords

    Bilateral monopoly; Privatization; Welfare; D4; L1;
    All these keywords.

    JEL classification:

    • D4 - Microeconomics - - Market Structure, Pricing, and Design
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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