Privatisation and vertical integration under a mixed duopoly

Juan Bárcena-Ruiz and María Begoña Garzón

Economic Systems, 2018, vol. 42, issue 3, 514-522

Abstract: This paper analyses the privatisation of public firms when private firms may be vertically integrated with their suppliers. We consider a mixed duopoly with a vertically integrated public firm. The private firm bargains the price of the input with its supplier if they are not vertically integrated. We find that for a given bargaining power of the private firm, it vertically integrates with its supplier if goods are weak substitutes. We also find that there is less vertical integration in the mixed duopoly than in the private duopoly. Finally, in general, the public firm is privatised when goods are close substitutes and the bargaining power of the private firm is low enough.

Keywords: Privatisation; Vertical integration; Mixed duopoly (search for similar items in EconPapers)
JEL-codes: L22 L33 L40 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecosys:v:42:y:2018:i:3:p:514-522

DOI: 10.1016/j.ecosys.2018.03.001

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