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Market Structure, Production Efficiency, And Privatization

Author

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  • YANG, YA-PO
  • WU, SHIH-JYE
  • HU, JIN-LI

Abstract

In order to analyze the optimal degree of privatizing an upstream public firm, this paper sets up a vertically related market that consists of an upstream mixed oligopoly with one public firm and m private firms and a downstream oligopoly with n private firms. The major findings of this paper are as follows: If the marginal production cost of input increases slowly (rapidly), then the optimal degree for privatizing a public upstream firm increases (decreases) with the number of downstream firms. If the marginal production cost of input increases moderately, then the optimal degree for privatizing the public upstream firm first increases and then decreases with the number of downstream firms. If the marginal production cost of input is constant, then the optimal degree for privatizing a public upstream firm always increases with the number of downstream firms.

Suggested Citation

  • Yang, Ya-Po & Wu, Shih-Jye & Hu, Jin-Li, 2014. "Market Structure, Production Efficiency, And Privatization," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 55(1), pages 89-108, June.
  • Handle: RePEc:hit:hitjec:v:55:y:2014:i:1:p:89-108
    DOI: 10.15057/26818
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. 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.
    2. 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.
    3. Chuyuan Zhang & Sang‐Ho Lee, 2023. "Foreign passive ownership and tariff‐induced free technology transfer under vertical integration," Manchester School, University of Manchester, vol. 91(2), pages 89-117, March.
    4. Nickerson, Jordan & Griffin, John M., 2017. "Debt correlations in the wake of the financial crisis: What are appropriate default correlations for structured products?," Journal of Financial Economics, Elsevier, vol. 125(3), pages 454-474.
    5. Heywood, John S. & Wang, Zerong & Ye, Guangliang, 2023. "Spatial price discrimination in a mixed duopoly input market," Regional Science and Urban Economics, Elsevier, vol. 102(C).
    6. John S. Heywood & Shiqiang Wang & Guangliang Ye, 2021. "Partial Privatization Upstream with Spatial Price Discrimination Downstream," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(1), pages 57-78, August.
    7. 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.
    8. Lee, Sang-Ho & Nakamura, Tamotsu & Park, Chul-Hi, 2017. "Optimal Privatization Policy in a Mixed Eco-Industry in the Presence of Commitments on Abatement Technologies," MPRA Paper 80902, University Library of Munich, Germany.

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    More about this item

    Keywords

    vertically related market upstream market; intermediate goods; mixed Oligopoly; privatization;
    All these keywords.

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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