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Optimal Privatisation Policy under Private Leadership in Mixed Oligopolies

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  • Ming Hsin Lin
  • Toshihiro Matsumura

Abstract

We discuss optimal privatisation policies in mixed oligopolies in which a public firm is the Stackelberg follower (private leadership). We find that under constant marginal cost, the optimal degree of privatisation is zero. When the marginal cost is increasing, however, the optimal degree is never zero, and full privatisation can be optimal. These results suggest that the optimal privatisation policy depends on the cost conditions. We also find that the optimal degree of privatisation is substantially lower under private leadership than in the simultaneous-move model when there is no cost difference between public and private firms.

Suggested Citation

  • Ming Hsin Lin & Toshihiro Matsumura, 2018. "Optimal Privatisation Policy under Private Leadership in Mixed Oligopolies," Arthaniti: Journal of Economic Theory and Practice, , vol. 17(1), pages 1-14, June.
    • Handle: RePEc:sae:artjou:v:17:y:2018:i:1:p:1-14
    DOI: 10.1177/0976747918778441
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    Cited by:

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    2. Chen, Jiaqi & Lee, Sang-ho & Muminov, Timur K., 2019. "Time-inconsistent Output Subsidy/Tax Policies in Free-entry Mixed Markets," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 60(1), pages 61-77, June.

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    More about this item

    Keywords

    Private leadership; Mixed oligopoly; mixed ownership in public firms; linear costs; quadratic costs; JEL: H42; L13;
    All these keywords.

    JEL classification:

    • 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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