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What role should public enterprises play in free-entry markets?

Listed author(s):
  • Hiroaki Ino

    ()

    (Kwansei Gakuin University)

  • Toshihiro Matsumura

    ()

    (University of Tokyo)

We investigate a desirable role of public enterprise in mixed oligopoly in free-entry markets. We compare the following three cases: (i) a public firm produces before private firms (public leadership), (ii) all firms produce simultaneously (Cournot), (iii) a public firm produces after private firms (private leadership). We find that private leadership is best and public leadership is worst, in contrast to the cases without entries and exits of private firms. We also investigate the welfare implication of privatization. We find that some important results shown by existing works do not hold under private leadership.

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File URL: http://192.218.163.163/RePEc/pdf/kgdp46.pdf
File Function: First version, 2009
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Paper provided by School of Economics, Kwansei Gakuin University in its series Discussion Paper Series with number 46.

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Length: 23 pages
Date of creation: Jun 2009
Date of revision: Jun 2009
Handle: RePEc:kgu:wpaper:46
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  1. ANDERSON, Simon & de PALMA, André & THISSE, Jacques-François, 1996. "Privatization and Efficiency in a Differentiated Industry," CORE Discussion Papers 1996045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
  3. Noriaki Matsushima & Toshihiro Matsumura, 2005. "Mixed Oligopoly, Foreign Firms, and Location Choice," Discussion Papers 2005-21, Kobe University, Graduate School of Business Administration.
  4. Federico Etro, 2007. "Stackelberg competition with endogenous entry," Working Papers 121, University of Milano-Bicocca, Department of Economics, revised 2007.
  5. Federico Etro, 2004. "Innovation by leaders," Economic Journal, Royal Economic Society, vol. 114(495), pages 281-303, 04.
  6. Chi-Chur Chao & Eden S. H. Yu, 2006. "Partial Privatization, Foreign Competition, and Optimum Tariff," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 87-92, 02.
  7. Sang-Ho Lee & Hae-Shin Hwang, 2003. "Partial Ownership For The Public Firm And Competition," The Japanese Economic Review, Japanese Economic Association, vol. 54(3), pages 324-335.
  8. Noriaki Matsushima & Toshihiro Matsumura, 2003. "Mixed oligopoly and spatial agglomeration," Canadian Journal of Economics, Canadian Economics Association, vol. 36(1), pages 62-87, February.
  9. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, vol. 84(1), pages 27-48, 02.
  10. Shuichi Ohori, 2006. "Optimal Environmental Tax and Level of Privatization in an International Duopoly," Journal of Regulatory Economics, Springer, vol. 29(2), pages 225-233, 03.
  11. Lahiri, Sajal & Ono, Yoshiyasu, 1995. "The Role of Free Entry in an Oligopolistic Heckscher-Ohlin Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 36(3), pages 609-624, August.
  12. Junichiro Ishida & Noriaki Matsushima, 2006. "Should civil servants be restricted in wage bargaining? A mixed-duopoly approach," Discussion Papers 2006-07, Kobe University, Graduate School of Business Administration.
  13. Toshihiro Matsumura & Noriaki Matsushima, 2004. "Endogenous Cost Differentials between Public and Private Enterprises: A Mixed Duopoly Approach," Economica, London School of Economics and Political Science, vol. 71(284), pages 671-688, November.
  14. Yuanzhu Lu, 2006. "Endogenous Timing in a Mixed Oligopoly with Foreign Competitors: the Linear Demand Case," Journal of Economics, Springer, vol. 88(1), pages 49-68, June.
  15. repec:adr:anecst:y:1994:i:33:p:06 is not listed on IDEAS
  16. Ali Dadpay & John S. Heywood, 2006. "Mixed Oligopoly In A Single International Market ," Australian Economic Papers, Wiley Blackwell, vol. 45(4), pages 269-280, December.
  17. Kenneth Fjell & Debashis Pal, 1996. "A Mixed Oligopoly in the Presence of Foreign Private Firms," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 737-743, August.
  18. Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
  19. Federico Etro, 2006. "Aggressive leaders," RAND Journal of Economics, RAND Corporation, vol. 37(1), pages 146-154, 03.
  20. Kenji Fujiwara, 2007. "Partial Privatization in a Differentiated Mixed Oligopoly," Journal of Economics, Springer, vol. 92(1), pages 51-65, September.
  21. Ishibashi, Ikuo & Matsumura, Toshihiro, 2006. "R&D competition between public and private sectors," European Economic Review, Elsevier, vol. 50(6), pages 1347-1366, August.
  22. María José Gil-Moltó & Joanna Poyago-Theotoky, 2008. "Flexible versus Dedicated Technology Adoption in the Presence of a Public Firm," Southern Economic Journal, Southern Economic Association, vol. 74(4), pages 997-1016, April.
  23. Sajal Lahiri & Yoshiyasu Ono, 1997. "Asymmetric oligopoly, international trade, and welfare: a synthesis," Journal of Economics, Springer, vol. 65(3), pages 291-310, October.
  24. Yuanzhu Lu & Sougata Poddar, 2007. "Firm Ownership, Product Differentiation And Welfare," Manchester School, University of Manchester, vol. 75(2), pages 210-217, 03.
  25. Federico Etro, 2006. "Market Leaders and Industrial Policy," Working Papers 103, University of Milano-Bicocca, Department of Economics, revised Nov 2006.
  26. Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
  27. Mujumdar, Sudesh & Pal, Debashis, 1998. "Effects of indirect taxation in a mixed oligopoly," Economics Letters, Elsevier, vol. 58(2), pages 199-204, February.
  28. Nett, Lorenz, 1994. "Why private firms are more innovative than public firms," European Journal of Political Economy, Elsevier, vol. 10(4), pages 639-653, December.
  29. Davidson, Carl & Mukherjee, Arijit, 2007. "Horizontal mergers with free entry," International Journal of Industrial Organization, Elsevier, vol. 25(1), pages 157-172, February.
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