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Partial Ownership For The Public Firm And Competition

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  • Sang‐Ho Lee
  • Hae‐Shin Hwang

Abstract

This paper investigates the issue of partial ownership (partial privatization) of a state‐owned public enterprise. We elaborate on the framework of Matsumura (1998) by allowing for managerial inefficiency, and show that under moderate conditions partial ownership is a reasonable choice of government in a monopoly market as well as in a mixed duopoly market, where a public firm competes with a profit‐maximizing private firm. We also provide some economic rationale on the result that neither full privatization nor full nation‐alization is optimum.

Suggested Citation

  • Sang‐Ho Lee & Hae‐Shin Hwang, 2003. "Partial Ownership For The Public Firm And Competition," The Japanese Economic Review, Japanese Economic Association, vol. 54(3), pages 324-335, September.
    • Handle: RePEc:bla:jecrev:v:54:y:2003:i:3:p:324-335
    DOI: 10.1111/1468-5876.00261
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    References listed on IDEAS

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    1. Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
    2. John Vickers & George Yarrow, 1988. "Privatization: An Economic Analysis," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262720116, December.
    3. Leroy P. Jones & Pankaj Tandon & Ingo Vogelsang, 1990. "Selling Public Enterprises: A Cost/Benefit Methodology," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262600625, December.
    4. De Fraja, Giovanni, 1993. "Unions and Wages in Public and Private Firms: A Game-Theoretic Analysis," Oxford Economic Papers, Oxford University Press, vol. 45(3), pages 457-469, July.
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