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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

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File URL: http://hdl.handle.net/10.1007/s00712-012-0310-8
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Bibliographic Info

Article provided by Springer in its journal Journal of Economics.

Volume (Year): 110 (2013)
Issue (Month): 2 (October)
Pages: 141-164

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Handle: RePEc:kap:jeczfn:v:110:y:2013:i:2:p:141-164

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Web page: http://www.springerlink.com/link.asp?id=108909

Related research

Keywords: Bilateral monopoly; Privatization; Welfare; D4; L1;

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References

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Cited by:
  1. 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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