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Pricing Strategies and Partial Privatization Policy Based on Complementary Competitive Market

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  • Akio Kawasaki

    (Oita University)

Abstract

This study investigates pricing strategies and privatization policies by assuming an asymmetric mixed duopoly market for complementary services. In addition, this study examines how technology affects the relationship between the degree of privatization and the degree of complementarity. The main results are as follows: When discriminatory pricing is adopted, the relationship between the degree of complementarity and the optimal degree of privatization is a monotonically increasing shape for inefficiently decreasing returns to scale. For an efficient one or for a constant return to scale, its relationship is an inverse U-shape. When uniform pricing is adopted, the monotone relationship (the inverse U-shaped relationship) holds for the decreasing return to scale (constant return to scale). When the degree of complementarity is small (large), uniform pricing (discriminatory pricing) with partial privatization is socially preferable as a pricing strategy. These results suggest that industries providing complementary services need to adopt discriminatory pricing with partial privatization.

Suggested Citation

  • Akio Kawasaki, 2022. "Pricing Strategies and Partial Privatization Policy Based on Complementary Competitive Market," Journal of Industry, Competition and Trade, Springer, vol. 22(1), pages 99-123, March.
    • Handle: RePEc:kap:jincot:v:22:y:2022:i:1:d:10.1007_s10842-021-00375-3
    DOI: 10.1007/s10842-021-00375-3
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    Cited by:

    1. Akio Kawasaki, 2023. "Pricing Strategies and Partial Privatization Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(3), pages 293-319, May.

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    More about this item

    Keywords

    Complementary goods; Discriminatory pricing; Multi-market competition; Partial privatization; Uniform pricing;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L93 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Air Transportation

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