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State-Owned Enterprise, Mixed Oligopoly and Entry

Author

Listed:
  • Bennett, John

    (Brunel University)

  • Manfredi La Manna

Abstract

We analyse state-owned enterprise (SOE) behaviour under pure and mixed oligopoly. An industry comprising at least two SOEs is shown not to have a symmetric stable equilibrium. This suggests the need for planning in such industries. For mixed oligopoly, we assume that an SOE has a cost disadvantage. When fixed costs must be sunk before entry, free entry implies that, if the SOE cost disadvantage is not too large, the presence of an SOE is immaterial for welfare (there is no welfare gain from privatisation). Similarly, a free-entry all-private oligopoly is welfare-superior to a public monopoly only if endowed with a significant cost advantage.

Suggested Citation

  • Bennett, John & Manfredi La Manna, 2003. "State-Owned Enterprise, Mixed Oligopoly and Entry," Royal Economic Society Annual Conference 2003 20, Royal Economic Society.
    • Handle: RePEc:ecj:ac2003:20
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    More about this item

    Keywords

    state-owned enterprise; mixed oligopoly; privatisation;
    All these keywords.

    JEL classification:

    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • P23 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Factor and Product Markets; Industry Studies; Population

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