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Upstream privatization in mixed markets with retailer's efforts

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  • Liu, Qian
  • Wang, Leonard F.S.
  • Chen, Charlie L.

Abstract

Through introducing the retailer efforts and product differentiation into a mixed oligopoly framework, this paper elucidates the welfare implication of upstream privatization in vertically-related markets. The results show that the optimal policy toward the semi-public firm is full nationalization in a more differentiated product market; as the product tends to be homogenized, however, full privatization can be socially optimal. In particular, compared with the horizontal mixed oligopoly literature, it points out some different mechanisms: in the presence of the rent-extracting effect and the horizontal market-competition effect, the impact of privatizing the upstream semi-public firm on welfare mainly depends on their collective effects.

Suggested Citation

  • Liu, Qian & Wang, Leonard F.S. & Chen, Charlie L., 2019. "Upstream privatization in mixed markets with retailer's efforts," The North American Journal of Economics and Finance, Elsevier, vol. 48(C), pages 338-345.
    • Handle: RePEc:eee:ecofin:v:48:y:2019:i:c:p:338-345
    DOI: 10.1016/j.najef.2019.03.003
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    References listed on IDEAS

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    Cited by:

    1. Yi Liu & Leonard F.S. Wang & Chenhang Zeng, 2023. "Upstream privatization and downstream licensing," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 148-165, March.
    2. Chuyuan Zhang & Sang‐Ho Lee, 2023. "Entry decision of a vertically integrated foreign firm with downstream subsidization and upstream privatization," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(1), pages 273-299, March.
    3. Dianshuang Wang & Xiaochun Li, 2020. "Privatization in Vertically Related Markets: Insights from a General Equilibrium Approach," Hacienda Pública Española / Review of Public Economics, IEF, vol. 234(3), pages 3-21, September.
    4. Yongfu Liang & Leonard F. S. Wang & Yapo Yang, 2023. "What role should public firms play in the upstream market?," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 101-117, March.
    5. Xingtang Wang & Leonard F. S. Wang, 2022. "Corporate social responsibility, vertical product differentiation, and privatization policy," The Japanese Economic Review, Springer, vol. 73(2), pages 403-425, April.
    6. Zhang, Chuyuan & Lee, Sang-Ho, 2021. "Downstream Subsidization and Upstream Privatization with a Vertically Integrated Foreign Firm," MPRA Paper 108193, University Library of Munich, Germany.
    7. Ryu, Han Eol, 2023. "Public utility ownership and in-kind trade policy in vertically related markets," Utilities Policy, Elsevier, vol. 81(C).

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    More about this item

    Keywords

    Mixed oligopoly; Vertically related market; Optimal privatization; Retailer efforts;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility

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