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Privatization Neutrality Theorem in Free Entry Markets

Author

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  • Matsumura Toshihiro

    (Institute of Social Science, The University of Tokyo, Tokyo, Japan)

  • Okumura Yasunori

    (Department of Logistics and Information Engineering, Tokyo University of Marine Science and Technology, Tokyo135-8533, Japan)

Abstract

It is known that if the number of entering firms is endogenous (free entry markets), privatization is not necessarily welfare neutral in mixed oligopolies under a uniform production subsidy policy. We revisit this problem by considering another policy tool, the output floor regulation. We investigate three free entry models with different time structures, a Cournot and two Stackelberg models. We find that neutrality is restored in free entry markets under the optimal output floor regulation, regardless of the time structure.

Suggested Citation

  • Matsumura Toshihiro & Okumura Yasunori, 2017. "Privatization Neutrality Theorem in Free Entry Markets," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 17(2), pages 1-9, June.
    • Handle: RePEc:bpj:bejtec:v:17:y:2017:i:2:p:9:n:2
    DOI: 10.1515/bejte-2015-0130
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    References listed on IDEAS

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    1. Hiroaki Ino & Toshihiro Matsumura, 2012. "How Many Firms Should Be Leaders? Beneficial Concentration Revisited," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 53(4), pages 1323-1340, November.
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    Citations

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    Cited by:

    1. Yasunori Okumura, 2017. "Asymmetric equilibria under price cap regulation," Journal of Economics, Springer, vol. 121(2), pages 133-151, June.
    2. 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.
    3. Lee, Sang-Ho & Muminov, Timur & Chen, Jiaqi, 2019. "Timing of R&D Decisions and Output Subsidies in a Mixed Duopoly with Spillovers," MPRA Paper 91452, University Library of Munich, Germany.
    4. Kosuke Hirose & Toshihiro Matsumura, 2019. "Comparing welfare and profit in quantity and price competition within Stackelberg mixed duopolies," Journal of Economics, Springer, vol. 126(1), pages 75-93, January.
    5. Jiaqi Chen & Sang-Ho Lee & Timur K. Muminov, 2021. "Welfare-reducing discriminatory output subsidies with mixed ownership and R&D," Economics Bulletin, AccessEcon, vol. 41(3), pages 1592-1602.
    6. Sang‐Ho Lee & Timur K. Muminov, 2021. "R&D Information sharing in a mixed duopoly and incentive subsidy for research joint venture competition," Bulletin of Economic Research, Wiley Blackwell, vol. 73(2), pages 154-170, April.
    7. Lee, Sang-Ho & Muminov, Timur, 2017. "R&D Output Sharing in a Mixed Duopoly and Incentive Subsidy Policy," MPRA Paper 81732, University Library of Munich, Germany.

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    More about this item

    Keywords

    endogenous market structure; minimum quantity regulation; mixed oligopolies; Stackelberg; Cournot; irrelevance results;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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