Privatization, Unemployment, and Welfare in the Harris-Todaro Model with a Mixed Duopoly

Jiancai Pi and Yin Jun
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Yin Jun: Department of Economics, Nanjing University, 22 Hankou Road, Nanjing 210093, P. R. China

The B.E. Journal of Economic Analysis & Policy, 2016, vol. 16, issue 4, 12

Abstract: This paper explores the unemployment and welfare effects of privatization through the Harris-Todaro model with a mixed duopoly. Our approach is more generalized than the existing literature. When capital is sector-specific (i. e., it is in the short run), an increase in the degree of partial privatization will raise the unemployment rate, but the change of social welfare is conditional on the market share of the public firm and the relative degree of partial privatization. When capital is sector-mobile (i. e., it is in the long run), an increase in the degree of partial privatization will reduce the unemployment rate, but the change of social welfare is also dependent on the market share of the public firm and the relative degree of partial privatization. Our results capture the fact that the public firm and the private firm usually coexist in a competitive environment in the real world.

Keywords: Harris-Todaro model; mixed duopoly; privatization; unemployment; welfare (search for similar items in EconPapers)
JEL-codes: L13 L22 L33 R23 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (3)

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DOI: 10.1515/bejeap-2016-0016

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