Market Structure, Competition, and Optimal Privatization: a Linear Supply Function Approach

Keita Yamane ()
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Keita Yamane: Kobe University

Journal of Industry, Competition and Trade, 2020, vol. 20, issue 3, No 7, 605-615

Abstract: Abstract We consider a mixed oligopoly, taking into account partial privatization. While early literature finds that competition intensification brings the optimal degree of privatization (ODP) close to perfect privatization, a recent study, using a payoff interdependence approach, shows that competition intensification brings ODP close to perfect nationalization. This study uses a linear supply function approach, another method of evaluating competition intensification, to examine the robustness of the results from the payoff interdependence approach. As a result, we also show that fierce competition brings ODP close to perfect nationalization. This has practical implications and serves as a warning with respect to privatization.

Keywords: Linear supply function; Mixed oligopoly; Optimal degree of privatization; Social welfare (search for similar items in EconPapers)
JEL-codes: H11 H42 L13 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1007/s10842-019-00315-2

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