By introducing the government's preference for tax revenues into the theoretical framework of unionized mixed oligopolies, this study investigates the efficiency of privatization. The results show that (i) regardless of the government's preference for tax revenues, its incentive to privatize a public firm depends on the number of the private firms and (ii) social welfare can decrease with an increase in the number of firms depending on the level of government's preference for tax revenue. Moreover, if the number of private firms and the government's preference for tax revenue are sufficiently small, then social welfare under a unionized privatized oligopoly is greater than under a unionized mixed oligopoly while the government has an incentive not to privatize the public firm, and vice versa if only the number of firms is sufficiently large.
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number
13028.
Find related papers by JEL classification: J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
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