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Optimal Privatization Policy under Private Leadership in Mixed Oligopolies

Ming Hsin Lin and Toshihiro Matsumura ()

MPRA Paper from University Library of Munich, Germany

Abstract: We discuss optimal privatization policies in mixed oligopolies in which a public firm is the Stackelberg follower (private leadership). We find that under constant marginal cost, the optimal degree of privatization is zero. When the marginal cost is increasing, however, the optimal degree is never zero, and full privatization can be optimal. These results suggest that the optimal privatization policy depends on the cost conditions. We also find that the optimal degree of privatization is substantially lower under private leadership than in the simultaneous-move model when there is no cost difference between public and private firms.

Keywords: private leadership; mixed oligopoly; mixed ownership in public firms (search for similar items in EconPapers)
JEL-codes: H42 L13 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-pbe and nep-reg
Date: 2017-06-27
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