Partial privatization with endogenous choice of strategic variable

José Méndez‐Naya and José A. Novo‐Peteiro

Managerial and Decision Economics, 2023, vol. 44, issue 2, 1215-1227

Abstract: This paper analyzes the optimal privatization policy when firms endogenously choose their strategic variable. The level of privatization is shown to determine: (i) the choice of strategic variable, whereby an asymmetric equilibrium could emerge (either Cournot–Bertrand or Bertrand–Cournot); (ii) the stability of equilibrium when the partially privatized firm and the private firm choose quantity and price respectively as the strategic variable; and (iii) the level of welfare, whereby Cournot–Cournot and Bertrand–Cournot games could lead to a greater welfare than the Bertrand–Bertrand model.

Date: 2023
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https://doi.org/10.1002/mde.3743

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Persistent link: https://EconPapers.repec.org/RePEc:wly:mgtdec:v:44:y:2023:i:2:p:1215-1227

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