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Market Structure, Competition, and Optimal Privatization: a Linear Supply Function Approach

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  • Keita Yamane

    (Kobe University)

Abstract

We consider a mixed oligopoly, taking into account partial privatization. While early literature finds that competition intensification brings the optimal degree of privatization (ODP) close to perfect privatization, a recent study, using a payoff interdependence approach, shows that competition intensification brings ODP close to perfect nationalization. This study uses a linear supply function approach, another method of evaluating competition intensification, to examine the robustness of the results from the payoff interdependence approach. As a result, we also show that fierce competition brings ODP close to perfect nationalization. This has practical implications and serves as a warning with respect to privatization.

Suggested Citation

  • Keita Yamane, 2020. "Market Structure, Competition, and Optimal Privatization: a Linear Supply Function Approach," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 605-615, September.
    • Handle: RePEc:kap:jincot:v:20:y:2020:i:3:d:10.1007_s10842-019-00315-2
    DOI: 10.1007/s10842-019-00315-2
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    References listed on IDEAS

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    More about this item

    Keywords

    Linear supply function; Mixed oligopoly; Optimal degree of privatization; Social welfare;
    All these keywords.

    JEL classification:

    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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