Privatization neutrality theorem in a mixed oligopoly with firm asymmetry

Kojun Hamada

Economics Bulletin, 2016, vol. 36, issue 1, 395-400

Abstract: This paper revisits the privatization neutrality theorem, which states that welfare is exactly the same before and after privatization when the government optimally subsidizes firms. Contrary to the existing literature that shows that this theorem does not hold when there is an asymmetry between a public firm and private firms in a mixed oligopoly, we prove that this theorem holds by appropriately setting the discriminatory subsidies. We show that, even if there exist differences in cost and/or the timing of production among firms, adopting the discriminatory subsidy policy leads to welfare neutrality.

Keywords: Privatization neutrality theorem; Mixed oligopoly; Firm asymmetry; Discriminatory subsidy; Stackelberg competition (search for similar items in EconPapers)
JEL-codes: H4 L1 (search for similar items in EconPapers)
Date: 2016-03-17
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.accessecon.com/Pubs/EB/2016/Volume36/EB-16-V36-I1-P41.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ebl:ecbull:eb-15-00639

Access Statistics for this article

More articles in Economics Bulletin from AccessEcon
Bibliographic data for series maintained by John P. Conley ().