Privatization, Government's Preference and Unionization Structure: A Mixed Oligopoly Approach

Kangsik Choi

MPRA Paper from University Library of Munich, Germany

Abstract: By introducing the government's preference for tax revenues into the theoretical framework of unionized mixed oligopolies, this study investigates the efficiency of privatization. The results show that (i) regardless of the government's preference for tax revenues, its incentive to privatize a public firm depends on the number of the private firms and (ii) social welfare can decrease with an increase in the number of firms depending on the level of government's preference for tax revenue. Moreover, if the number of private firms and the government's preference for tax revenue are sufficiently small, then social welfare under a unionized privatized oligopoly is greater than under a unionized mixed oligopoly while the government has an incentive not to privatize the public firm, and vice versa if only the number of firms is sufficiently large.

Keywords: Government's Preference; Social Welfare; Tax; Privatization; Union (search for similar items in EconPapers)
JEL-codes: A11 C7 C72 D43 H44 J51 L13 (search for similar items in EconPapers)
Date: 2009-01-27
New Economics Papers: this item is included in nep-bec, nep-cta and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:13028

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