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Flexible Privatization Policy in Free-Entry Markets

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  • Sato, Susumu
  • Matsumura, Toshihiro

Abstract

We investigate a mixed oligopoly in a free-entry market in the presence of shadow cost of public funding. The government chooses the degree of privatization before the entry of private firms and then adjusts the degree of privatization after the entry. We show that a pre-entry privatization policy may serve as a commitment device if the foreign ownership share of private firms is moderate, and substitutes the ideal privatization policy with complete commitment if the equilibrium pre-entry privatization policy is partial privatization.

Suggested Citation

  • Sato, Susumu & Matsumura, Toshihiro, 2018. "Flexible Privatization Policy in Free-Entry Markets," MPRA Paper 88444, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:88444
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    References listed on IDEAS

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    More about this item

    Keywords

    Shadow cost of public funds; free entry; state-owned public enterprises; foreign competition; time inconsistency;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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