Public Firm in Mixed Oligopolistic Structure: A Theoretical Exposition

Susmita Chatterjee, Srobonti Chattopadhyay, Rittwik Chatterjee and Debabrata Dutta

MPRA Paper from University Library of Munich, Germany

Abstract: The logic for state monopoly of public utilities arises from increasing returns to scale and the concern that private business in these areas results in monopolistic exploitation of consumers. The state monopoly however is fraught with the danger of production inefficiency. In this backdrop, the market form of mixed oligopoly is contemplated in markets like health, education, electricity, gas, telecommunications etc, where public and private sector coexists. The private firms maximize profit but the public firm maximizes social welfare. Despite this theoretical exposition, it is often observed that public firms fail to make contributions according to their potentiality. The public firm in an industry with rapid change in technology can perform inefficiently due to decision making delay, adherence to social obligation. The policy makers must rise to these occasions then survival of public firms will be smooth. The option of public private partnership also derives affirmative results for the society and the particular industry per se.

Keywords: Public Firm; Public Private Partnership; Mixed Oligopoly (search for similar items in EconPapers)
JEL-codes: H44 L13 (search for similar items in EconPapers)
Date: 2017-04-04, Revised 2017-05-15
New Economics Papers: this item is included in nep-bec and nep-com
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