SOE Reform under Oligopolistic Market Structure: The Optimal Choice of State Shares

Qunyan Sun, Jie Li () and Anming Zhang
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Qunyan Sun: Lingnan College, Sun Yat-Sen University, PRC
Jie Li: Lingnan College, Sun Yat-Sen University, PRC
Anming Zhang: Commerce and Business Administration, University of British Columbia, Canada

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2006, vol. 1, issue 1, 39-47

Abstract: This paper examines the effect of the change of state shares in a state-owned enterprise (SOE) on the efficiency of the whole society and the payoff of the government. This issue is addressed by setting up a mixed oligopolistic competition model and dividing the analysis into two cases: closed economy and open economy. The basic results are as follows: If the relative production efficiency of an SOE is too low, complete state ownership is not optimal, and privatization will be a necessary step; however, if the relative production efficiency of an SOE is not too low, complete privatization is not optimal both for the government and from the perspective of social welfare. The results can, to a certain extent, provide theoretical support to the government s idea on the SOE reform.

Keywords: state shares; transition economy; employment burden; mixed oligopoly; WTO entry and foreign competition (search for similar items in EconPapers)
JEL-codes: L1 L3 P2 (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:1:y:2006:i:1:p:39-47

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