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Privatization neutrality theorem revisited


  • Matsumura, Toshihiro
  • Okumura, Yasunori


Fjell and Heywood (2004) show that privatization is not necessarily welfare neutral in mixed oligopolies under a production subsidy if firms move sequentially. We find that the neutrality holds for any time structure if instead an output floor is introduced.

Suggested Citation

  • Matsumura, Toshihiro & Okumura, Yasunori, 2013. "Privatization neutrality theorem revisited," Economics Letters, Elsevier, vol. 118(2), pages 324-326.
  • Handle: RePEc:eee:ecolet:v:118:y:2013:i:2:p:324-326 DOI: 10.1016/j.econlet.2012.11.028

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    References listed on IDEAS

    1. Kato, Kazuhiko & Tomaru, Yoshihiro, 2007. "Mixed oligopoly, privatization, subsidization, and the order of firms' moves: Several types of objectives," Economics Letters, Elsevier, vol. 96(2), pages 287-292, August.
    2. repec:ebl:ecbull:v:12:y:2006:i:5:p:1-6 is not listed on IDEAS
    3. De Fraja, Gianni & Iossa, Elisabetta, 1998. "Price Caps and Output Floors: A Comparison of Simple Regulatory Rules," Economic Journal, Royal Economic Society, vol. 108(450), pages 1404-1421, September.
    4. Toshihiro Matsumura & Daisuke Shimizu, 2010. "Privatization Waves," Manchester School, University of Manchester, vol. 78(6), pages 609-625, December.
    5. Maria José Gil-Moltó & Joanna Poyago-Theotoky & Vasileios Zikos, 2011. "R&D Subsidies, Spillovers, and Privatization in Mixed Markets," Southern Economic Journal, Southern Economic Association, vol. 78(1), pages 233-255, July.
    6. Yoshihiro Tomaru & Masayuki Saito, 2010. "Mixed Duopoly, Privatization And Subsidization In An Endogenous Timing Framework," Manchester School, University of Manchester, vol. 78(1), pages 41-59, January.
    7. White, Mark D., 1996. "Mixed oligopoly, privatization and subsidization," Economics Letters, Elsevier, vol. 53(2), pages 189-195, November.
    8. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
    9. Fjell, Kenneth & Heywood, John S., 2004. "Mixed oligopoly, subsidization and the order of firm's moves: the relevance of privatization," Economics Letters, Elsevier, vol. 83(3), pages 411-416, June.
    10. repec:ebl:ecbull:v:8:y:2007:i:2:p:1-7 is not listed on IDEAS
    11. Matsumura, Toshihiro & Ogawa, Akira, 2012. "Price versus quantity in a mixed duopoly," Economics Letters, Elsevier, vol. 116(2), pages 174-177.
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    Cited by:

    1. Stefano Colombo, 2016. "Mixed oligopolies and collusion," Journal of Economics, Springer, vol. 118(2), pages 167-184, June.
    2. Zoltán Rácz & Attila Tasnádi, 2016. "A Bertrand–Edgeworth oligopoly with a public firm," Journal of Economics, Springer, vol. 119(3), pages 253-266, November.
    3. Lee, Sang-Ho & Matsumura, Toshihiro & Sato, Susumu, 2017. "A New Approach to Free Entry Markets in Mixed Oligopolies: Welfare Implications," MPRA Paper 76450, University Library of Munich, Germany.
    4. Matsumura, Toshihiro & Sunada, Takeaki, 2013. "Advertising competition in a mixed oligopoly," Economics Letters, Elsevier, vol. 119(2), pages 183-185.
    5. repec:kap:jeczfn:v:123:y:2018:i:1:d:10.1007_s00712-017-0559-z is not listed on IDEAS
    6. Kenji Fujiwara, 2015. "Necessarily welfare-improving privatization," Discussion Paper Series 130, School of Economics, Kwansei Gakuin University, revised Jul 2015.
    7. Lee, Sang-Ho & Muminov, Timur K. & Tomaru, Yoshihiro, 2017. "Partial Privatization And Subsidization In A Mixed Duopoly: R&D Versus Output Subsidies," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 58(2), pages 163-177, December.
    8. Hirose, Kosuke & Matsumura, Toshihiro, 2017. "Comparing Welfare and Profit in Quantity and Price Competition within Stackelberg Mixed Duopolies," MPRA Paper 77700, University Library of Munich, Germany.
    9. Lin, Ming Hsin & Matsumura, Toshihiro, 2017. "Optimal Privatization and Uniform Subsidy Policies: A Synthesis," MPRA Paper 77285, University Library of Munich, Germany.
    10. 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.
    11. Scrimitore, Marcella, 2014. "Quantity competition vs. price competition under optimal subsidy in a mixed oligopoly," Economic Modelling, Elsevier, vol. 42(C), pages 166-176.
    12. repec:kap:jeczfn:v:121:y:2017:i:2:d:10.1007_s00712-017-0521-0 is not listed on IDEAS
    13. repec:eee:reveco:v:50:y:2017:i:c:p:1-7 is not listed on IDEAS
    14. Lee, Sang-Ho & Tomaru, Yoshihiro, 2017. "Output and R&D subsidies in a mixed oligopoly," MPRA Paper 84410, University Library of Munich, Germany.
    15. Xu, Lili & Lee, Sang-Ho & Wang, Leonard, 2017. "Strategic Trade and Privatization Policies in Bilateral Mixed Markets," MPRA Paper 80340, University Library of Munich, Germany.
    16. Junichi Haraguchi & Toshihiro Matsumura, 2016. "Cournot–Bertrand comparison in a mixed oligopoly," Journal of Economics, Springer, vol. 117(2), pages 117-136, March.
    17. Okumura, Yasunori, 2015. "Volume and share quotas in Cournot competition," Economic Modelling, Elsevier, vol. 47(C), pages 137-144.
    18. Sato, Susumu & Matsumura, Toshihiro, 2017. "Shadow Cost of Public Funds and Privatization Policies," MPRA Paper 81054, University Library of Munich, Germany.
    19. Toshihiro Matsumura & Yasunori Okumura, 2014. "Comparison between specific taxation and volume quotas in a free entry Cournot oligopoly," Journal of Economics, Springer, vol. 113(2), pages 125-132, October.

    More about this item


    Minimum quantity regulation; Mixed oligopolies; Stackelberg; Cournot; Irrelevance results;

    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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