Mixed oligopoly, public firm behavior, and free private entry

John Bennett () and Manfredi La Manna

Economics Letters, 2012, vol. 117, issue 3, 767-769

Abstract: We analyze a mixed oligopoly with free entry by private firms, assuming that a public firm maximizes an increasing function of output, subject to a break-even constraint. We establish an irrelevance result: whenever a mixed oligopoly is viable, then aggregate output, aggregate costs and welfare are the same with and without the public firm. However, replacing a viable mixed oligopoly with a public monopoly yields higher net welfare. Implications for privatization policy are suggested.

Keywords: Mixed oligopoly; Entry; Privatization (search for similar items in EconPapers)
JEL-codes: H32 L32 P23 (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (15)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:117:y:2012:i:3:p:767-769

DOI: 10.1016/j.econlet.2012.08.025

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