International Trade and Strategic Privatization
The literature on mixed oligopoly does not consider the strategic interaction between governments when they decide whether to privatize their publicly-owned firms. In order to analyze this question, we consider two countries and assume that publicly-owned firms are less efficient than private firms. We obtain that when the marginal cost of the publicly-owned firms takes an intermediate value, each government wants it to be the government of the other country that privatizes its publicly-owned firm. In this case, only one government privatizes, and that government obtains lower social welfare and producer surplus than the other. Copyright Blackwell Publishing Ltd 2005.
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Volume (Year): 9 (2005)
Issue (Month): 4 (November)
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