An analysis of entry-then-privatization model: welfare and policy implications

Sang-Ho Lee (), Toshihiro Matsumura and Susumu Sato

Journal of Economics, 2018, vol. 123, issue 1, No 4, 88 pages

Abstract: Abstract This study formulates a new model of mixed oligopolies in free entry markets. A state-owned public enterprise is established before the game, private enterprises enter the market, and then the government chooses the degree of privatization of the public enterprise (termed the entry-then-privatization model herein). We find that under general demand and cost functions, the timing of privatization does not affect consumer surplus or the output of each private firm, while it does affect the equilibrium degree of privatization, number of entering firms, and output of the public firm. The equilibrium degree of privatization is too high (low) for both domestic and world welfare if private firms are domestic (foreign).

Keywords: Timing of privatization; Commitment; State-owned public enterprises; Foreign competition (search for similar items in EconPapers)
JEL-codes: H42 L13 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (50)

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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:123:y:2018:i:1:d:10.1007_s00712-017-0559-z

DOI: 10.1007/s00712-017-0559-z

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