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Acquisitions in the Electricity Sector: Active vs. Passive Owners

Author

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  • Nese, Gjermund

    (†Institute for Research in Economics and Business Administration (SNF))

Abstract

The starting point of this paper is a mixed oligopoly market consisting of n privately owned profit maximizing firms and 1 state-owned welfare maximizing firm. Motivated by the trend of mergers and acquisitions in the liberalized electricity markets, and by the debate about public or private ownership, the paper looks at two cases. In Case 1, the state-owned company acquires an ownership share in one of the private companies. In Case 2, the state-owned company is partially privatized. The paper focuses on differences in generated quantities and social surplus, depending on whether the investors behind the acquisitions are behaving as active or passive owners. One result shows that in the case of partial privatization, passive ownership provides the highest total industry generation, while active ownership induces maximum social surplus.

Suggested Citation

  • Nese, Gjermund, 2002. "Acquisitions in the Electricity Sector: Active vs. Passive Owners," Working Papers in Economics 16/02, University of Bergen, Department of Economics.
    • Handle: RePEc:hhs:bergec:2002_016
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    References listed on IDEAS

    as
    1. de Fraja, Giovanni & Delbono, Flavio, 1990. "Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
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    More about this item

    Keywords

    General; Oligopoly and Other Imperfect Markets; Public Enterprises; Public-Private Enterprises;
    All these keywords.

    JEL classification:

    • D60 - Microeconomics - - Welfare Economics - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises

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