Upstream privatization in mixed markets with retailer's efforts

Qian Liu, Leonard F.S. Wang and Charlie L. Chen

The North American Journal of Economics and Finance, 2019, vol. 48, issue C, 338-345

Abstract: Through introducing the retailer efforts and product differentiation into a mixed oligopoly framework, this paper elucidates the welfare implication of upstream privatization in vertically-related markets. The results show that the optimal policy toward the semi-public firm is full nationalization in a more differentiated product market; as the product tends to be homogenized, however, full privatization can be socially optimal. In particular, compared with the horizontal mixed oligopoly literature, it points out some different mechanisms: in the presence of the rent-extracting effect and the horizontal market-competition effect, the impact of privatizing the upstream semi-public firm on welfare mainly depends on their collective effects.

Keywords: Mixed oligopoly; Vertically related market; Optimal privatization; Retailer efforts (search for similar items in EconPapers)
JEL-codes: D43 L13 L21 M14 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:48:y:2019:i:c:p:338-345

DOI: 10.1016/j.najef.2019.03.003

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