Privatization and Efficiency in a Differentiated Industry

Simon Anderson, André de Palma () and Jacques Thisse

No 1996045, LIDAM Discussion Papers CORE from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: We consider a market in which a public firm competes against private ones, and ask what happens when the public firm is privatized. In the short run, privatization is harmful because prices rise: the disciplinary role of the public firm is lost. In the long run, privatization leads to further entry; the net effect is beneficial if consumer preference for variety is not too weak. A sufficient statistic for the social surplus to he higher in the long run is that the public firm makes a loss. This suggests that profitable firma should not necessarily be privatized.

Keywords: privatization; mixed oligopoly; product differentiation (search for similar items in EconPapers)
JEL-codes: L13 L32 L33 (search for similar items in EconPapers)
Date: 1996-09-01
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Related works:
Journal Article: Privatization and efficiency in a differentiated industry (1997)
Working Paper: Privatization and efficiency in a differentiated industry (1997)
Working Paper: Privatization and Efficiency in a Differentiated Industry (1995)
Working Paper: Privatization and Efficiency in a Differentiated Industry (1995)
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Persistent link: https://EconPapers.repec.org/RePEc:cor:louvco:1996045

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