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Mixed oligopoly and spatial price discrimination with foreign firms

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  • Heywood, John S.
  • Ye, Guangliang

Abstract

This paper is the first to examine the welfare consequences of foreign competition in a mixed oligopoly set in a linear model of spatial price discrimination. It demonstrates that the entry of a foreign firm often lowers domestic welfare. This results because the public firm locates largely independently of the presence of the foreign firm and because the profit earned by the foreign firm reduces domestic welfare. Privatization of the public firm typically lowers domestic welfare but can increase global welfare. Thus, domestic governments are unlikely to allow foreign entry and when they do, they are unlikely to privatize the public firm despite the potential rise in global welfare.

Suggested Citation

  • Heywood, John S. & Ye, Guangliang, 2009. "Mixed oligopoly and spatial price discrimination with foreign firms," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 592-601, September.
  • Handle: RePEc:eee:regeco:v:39:y:2009:i:5:p:592-601
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Wang, Leonard F.S. & Tomaru, Yoshihiro, 2015. "The feasibility of privatization and foreign penetration," International Review of Economics & Finance, Elsevier, vol. 39(C), pages 36-46.
    2. Juan Carlos Bárcena-Ruiz & Francisco Javier Casado-Izaga, 2014. "Zoning Under Spatial Price Discrimination," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 659-665, April.
    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. Hiroaki Ino & Toshihiro Matsumura, 2010. "What role should public enterprises play in free-entry markets?," Journal of Economics, Springer, vol. 101(3), pages 213-230, November.
    5. repec:eee:reveco:v:49:y:2017:i:c:p:58-68 is not listed on IDEAS
    6. Eleftheriou, Konstantinos & Michelacakis, Nickolas, 2015. "A Unified Model of Spatial Price Discrimination," MPRA Paper 66557, University Library of Munich, Germany.
    7. Juan Carlos Bárcena-Ruiz & F. Javier Casado-Izaga, 2016. "Foreign-owned firms and zoning under spatial price discrimination," Letters in Spatial and Resource Sciences, Springer, vol. 9(2), pages 145-155, July.
    8. Cato, Susumu & Matsumura, Toshihiro, 2017. "Optimal Production Tax and Privatization Policies under an Endogenous Market Structure," MPRA Paper 82893, University Library of Munich, Germany.
    9. Haraguchi, Junichi & Matsumura, Toshihiro, 2014. "Price versus quantity in a mixed duopoly with foreign penetration," Research in Economics, Elsevier, vol. 68(4), pages 338-353.
    10. Guangliang Ye, 2016. "Leadership and Privatisation in a Mixed Multi-product Oligopoly: An Endogenous Timing Model," Australian Economic Papers, Wiley Blackwell, vol. 55(2), pages 170-180, June.
    11. repec:kap:jincot:v:17:y:2017:i:4:d:10.1007_s10842-017-0248-1 is not listed on IDEAS
    12. Kress, Dominik & Pesch, Erwin, 2012. "Sequential competitive location on networks," European Journal of Operational Research, Elsevier, vol. 217(3), pages 483-499.
    13. Xu, Lili & Lee, Sang-Ho, 2015. "Strategic Privatization With Tariffs And Environmental Taxes In An International Mixed Duopoly," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 56(1), pages 135-154, June.
    14. Takeshi Ebina & Toshihiro Matsumura & Daisuke Shimizu, 2009. "Mixed oligopoly and spatial agglomeration in quasi-linear city," Economics Bulletin, AccessEcon, vol. 29(4), pages 2722-2729.
    15. Eleftheriou, Konstantinos & Michelacakis, Nickolas, 2017. "Spatial Price Discrimination and Privatization on Vertically Related Markets," MPRA Paper 76964, University Library of Munich, Germany.
    16. John S. Heywood & Guangliang Ye, 2009. "Privatisation And Timing In A Mixed Oligopoly With Both Foreign And Domestic Firms ," Australian Economic Papers, Wiley Blackwell, vol. 48(4), pages 320-332, December.
    17. repec:hit:hitjcm:v:56:y:2015:i:1:p:135-154 is not listed on IDEAS
    18. Toshihiro Matsumura & Akira Ogawa, 2017. "Inefficient but Robust Public Leadership," Journal of Industry, Competition and Trade, Springer, vol. 17(4), pages 387-398, December.

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