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Competition and Privatization

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Author Info
Diaz, A.
Fauli-Oller, R.

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Abstract

In this paper we study the interaction between privatization and competition (liberalization) in the market. Privatization is understood as a change in the objective of the owners of the firm. A public firm maximizes social welfare and a private firm maximizes profits. We find that this difference in objectives matters less the greater the level of competition because then the behavior of a welfare maximizing firm converges to the behavior of a profit maximizing firm.

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Publisher Info
Paper provided by Valencia - Instituto de Investigaciones Economicas in its series Papers with number 99-13.

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Length: 28 pages
Date of creation: 1999
Date of revision:
Handle: RePEc:fth:valinv:99-13

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Postal: Instituto Valenciano de InvEstigaciones Economics, C/Guardia Civil, 22, Esc. 2, 1 46020 Valencia (Espana).
Phone: +34 96 319 00 50
Fax: +34 96 319 00 55
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Related research
Keywords: COMPETITION PRIVATIZATION MARKET STRUCTURE

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Find related papers by JEL classification:
D40 - Microeconomics - - Market Structure and Pricing - - - General
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out

References listed on IDEAS
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  1. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter. [Downloadable!] (restricted)
  2. Waverman, Leonard & Sirel, Esen, 1997. "European Telecommunications Markets on the Verge of Full Liberalization," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 113-26, Fall. [Downloadable!] (restricted)
  3. Juan Carlos Barcena-Ruiz & Maria Paz Espinosa, 1996. "Long-Term or Short-Term Managerial Incentive Contracts," Journal of Economics & Management Strategy, Blackwell Publishing, vol. 5(3), pages 343-359, 09. [Downloadable!] (restricted)
  4. Barros, Fatima, 1995. "Incentive schemes as strategic variables: An application to a mixed duopoly," International Journal of Industrial Organization, Elsevier, vol. 13(3), pages 373-386, September. [Downloadable!] (restricted)
  5. Newbery, David M & Pollitt, Michael G, 1997. "The Restructuring and Privatization of Britain's CEGB--Was It Worth It?," Journal of Industrial Economics, Blackwell Publishing, vol. 45(3), pages 269-303, September. [Downloadable!] (restricted)
  6. Michael L. Katz, 1991. "Game-Playing Agents: Unobservable Contracts as Precommitments," RAND Journal of Economics, The RAND Corporation, vol. 22(3), pages 307-328, Autumn. [Downloadable!] (restricted)
    Other versions:
  7. Steve Dowrick, 1986. "von Stackelberg and Cournot Duopoly: Choosing Roles," RAND Journal of Economics, The RAND Corporation, vol. 17(2), pages 251-260, Summer. [Downloadable!] (restricted)
  8. de Palma, André & Thisse, Jacques-François, 1995. "Privatization and Efficiency in a Differentiated Industry," CEPR Discussion Papers 1136, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  9. Fershtman, Chaim, 1990. "The Interdependence between Ownership Status and Market Structure: The Case of Privatization," Economica, London School of Economics and Political Science, vol. 57(227), pages 319-28, August. [Downloadable!] (restricted)
  10. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December. [Downloadable!] (restricted)
  11. Fershtman, Chaim & Judd, Kenneth L, 1987. "Equilibrium Incentives in Oligopoly," American Economic Review, American Economic Association, vol. 77(5), pages 927-40, December. [Downloadable!] (restricted)
  12. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-11, April. [Downloadable!] (restricted)
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