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Mixed Oligopoly and Privatization in General Equilibrium

Author

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  • Kenji Fujiwara

    (School of Economics, Kwansei Gakuin University)

Abstract

Making use of a general oligopolistic equilibrium model with private and public firms, this paper examines the welfare effects of privatization. We show that in an exogenous market structure privatizing the public firm necessarily reduces welfare, which contrasts with the existing result that some degree of privatization is optimal. In contrast, we find that privatization has no effect on welfare in an endogenous market structure with free entry of private firms.

Suggested Citation

  • Kenji Fujiwara, 2015. "Mixed Oligopoly and Privatization in General Equilibrium," Discussion Paper Series 137, School of Economics, Kwansei Gakuin University, revised Dec 2015.
    • Handle: RePEc:kgu:wpaper:137
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    File URL: http://192.218.163.163/RePEc/pdf/kgdp137.pdf
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    References listed on IDEAS

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    1. Arnott, Richard J. & Greenwald, Bruce & Kanbur, Ravi & Nalebuff, Barry, 2003. "Joseph Stiglitz and Economics for an Imperfect World," Working Papers 127202, Cornell University, Department of Applied Economics and Management.
    2. Susumu Cato & Toshihiro Matsumura, 2015. "Optimal Privatisation and Trade Policies with Endogenous Market Structure," The Economic Record, The Economic Society of Australia, vol. 91(294), pages 309-323, September.
    3. Jiang, Yi & Peng, Mike W. & Yang, Xiaohua & Mutlu, Canan C., 2015. "Privatization, governance, and survival: MNE investments in private participation projects in emerging economies," Journal of World Business, Elsevier, vol. 50(2), pages 294-301.
    4. Toshihiro Matsumura & Yoshihiro Tomaru, 2012. "Market Structure And Privatization Policy Under International Competition," The Japanese Economic Review, Japanese Economic Association, vol. 63(2), pages 244-258, June.
    5. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
    6. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, vol. 84(1), pages 27-48, February.
    7. Hamid Beladi & Avik Chakrabarti & Sugata Marjit, 2013. "A Mixed GOLE Model of Cross-Border Mergers and Trade," Working Papers 0143eco, College of Business, University of Texas at San Antonio.
    8. Rudy Colacicco, 2015. "Ten Years Of General Oligopolistic Equilibrium: A Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 29(5), pages 965-992, December.
    9. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-311, April.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Sang-Ho Lee & Toshihiro Matsumura & Susumu Sato, 2018. "An analysis of entry-then-privatization model: welfare and policy implications," Journal of Economics, Springer, vol. 123(1), pages 71-88, January.
    2. Lee, Sang-Ho & Matsumura, Toshihiro & Sato, Susumu, 2017. "A New Approach to Free Entry Markets in Mixed Oligopolies: Welfare Implications," MPRA Paper 76450, University Library of Munich, Germany.

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    More about this item

    Keywords

    Partial privatization; General oligopolistic equilibrium; Exogenous market structure; Endogenous market structure;
    All these keywords.

    JEL classification:

    • 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
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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