IDEAS home Printed from https://ideas.repec.org/a/bpj/bejtec/v19y2019i1p14n13.html
   My bibliography  Save this article

Privatizing Multi-subsidiary Public Firm in Location Model

Author

Listed:
  • Chen Jingliang

    (Deloitte Enterprise Consulting (Shanghai) Co., Ltd., 21F Bund Center 222 Yanan Road East, Shanghai200000, P.R. China.)

  • Shuai Jie

    (Wenlan School of Business, Zhongnan University of Economics and Law, 182 Nanhu Ave., East Lake High-tech Development Zone, Wuhan430073, P.R.China.)

Abstract

This paper examines a different way of privatization from existing literature. In a mixed duopoly Hotelling type model in which the public firm consists of multiple subsidiaries, instead of privatizing the public firm as its entirety, the government may privatize only one of the subsidiaries (for example the manufacturing subsidiary). We find that this kind of privatization always improves social welfare comparing to no privatization at all. And comparing to privatizing the public firm in its entirety, privatizing only the manufacturing subsidiary always results in larger consumer welfare and results in larger social welfare when transport cost or R&D cost is sufficiently large.

Suggested Citation

  • Chen Jingliang & Shuai Jie, 2019. "Privatizing Multi-subsidiary Public Firm in Location Model," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 19(1), pages 1-14, January.
    • Handle: RePEc:bpj:bejtec:v:19:y:2019:i:1:p:14:n:13
    DOI: 10.1515/bejte-2017-0056
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejte-2017-0056
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejte-2017-0056?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Toshihiro Matsumura & Noriaki Matsushima & Ikuo Ishibashi, 2009. "Privatization and entries of foreign enterprises in a differentiated industry," Journal of Economics, Springer, vol. 98(3), pages 203-219, December.
    2. Ishida, Junichiro & Matsushima, Noriaki, 2009. "Should civil servants be restricted in wage bargaining? A mixed-duopoly approach," Journal of Public Economics, Elsevier, vol. 93(3-4), pages 634-646, April.
    3. Juan Carlos Bárcena-Ruiz & Francisco Javier Casado-Izaga, 2014. "Zoning Under Spatial Price Discrimination," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 659-665, April.
    4. Jie Shuai, 2017. "Mixed Duopoly with a Partial-Delegated-Public Firm," Manchester School, University of Manchester, vol. 85(3), pages 339-356, June.
    5. repec:bla:econom:v:71:y:2004:i:284:p:671-688 is not listed on IDEAS
    6. Minoru Kitahara & Toshihiro Matsumura, 2013. "Mixed Duopoly, Product Differentiation And Competition," Manchester School, University of Manchester, vol. 81(5), pages 730-744, September.
    7. Jie Shuai, 2016. "Mixed Duopoly with Subcontracting," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 37(1), pages 37-49, January.
    8. Kumar, Ashutosh & Saha, Bibhas, 2008. "Spatial competition in a mixed duopoly with one partially nationalized firm," Journal of Comparative Economics, Elsevier, vol. 36(2), pages 326-341, June.
    9. Kamijo, Yoshio & Tomaru, Yoshihiro, 2014. "The endogenous objective function of a partially privatized firm: A Nash bargaining approach," Economic Modelling, Elsevier, vol. 39(C), pages 101-109.
    10. Sudheer Gupta & Richard Loulou, 1998. "Process Innovation, Product Differentiation, and Channel Structure: Strategic Incentives in a Duopoly," Marketing Science, INFORMS, vol. 17(4), pages 301-316.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Jie Shuai, 2017. "Mixed Duopoly with a Partial-Delegated-Public Firm," Manchester School, University of Manchester, vol. 85(3), pages 339-356, June.
    2. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2020. "Partial privatization in an international mixed oligopoly under product differentiation," Journal of Economics, Springer, vol. 131(1), pages 77-100, September.
    3. Lyu, Yuanzhen & Shuai, Jie, 2017. "Mixed duopoly with foreign firm and subcontracting," International Review of Economics & Finance, Elsevier, vol. 49(C), pages 58-68.
    4. Youping Li & Jie Shuai, 2018. "A Welfare Analysis of Location Space Constraints with Vertically Separated Sellers," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 52(1), pages 161-177, February.
    5. Jorge Fernández‐Ruiz, 2019. "A Mixed Duopoly With Switching Costs," The Japanese Economic Review, Japanese Economic Association, vol. 70(2), pages 235-257, June.
    6. Jie Shuai, 2017. "A comment on mixed oligopoly spatial model: the non-uniform consumer distribution," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(1), pages 57-63, April.
    7. Haraguchi, Junichi & Matsumura, Toshihiro & Yoshida, Shohei, 2018. "Competitive pressure from neighboring markets and optimal privatization policy," Japan and the World Economy, Elsevier, vol. 46(C), pages 1-8.
    8. Hiroaki Ino & Toshihiro Matsumura, 2010. "What role should public enterprises play in free-entry markets?," Journal of Economics, Springer, vol. 101(3), pages 213-230, November.
    9. Toshihiro Matsumura & Yoshihiro Tomaru, 2013. "Mixed duopoly, privatization, and subsidization with excess burden of taxation," Canadian Journal of Economics, Canadian Economics Association, vol. 46(2), pages 526-554, May.
    10. Haraguchi, Junichi & Matsumura, Toshihiro, 2014. "Price versus quantity in a mixed duopoly with foreign penetration," Research in Economics, Elsevier, vol. 68(4), pages 338-353.
    11. Juan Carlos Bárcena-Ruiz & F. Javier Casado-Izaga, 2018. "Optimal size of a residential area within a municipality," Journal of Economics, Springer, vol. 124(1), pages 75-92, May.
    12. Lee, Sang-Ho & Matsumura, Toshihiro & Sato, Susumu, 2017. "A New Approach to Free Entry Markets in Mixed Oligopolies: Welfare Implications," MPRA Paper 76450, University Library of Munich, Germany.
    13. Tai-Liang Chen & Yuxiang Zou, 2022. "Product differentiation, privatization commitment and profitability comparisons," Journal of Economics, Springer, vol. 136(1), pages 1-24, June.
    14. Sang-Ho Lee & Toshihiro Matsumura & Susumu Sato, 2018. "An analysis of entry-then-privatization model: welfare and policy implications," Journal of Economics, Springer, vol. 123(1), pages 71-88, January.
    15. Arghya Ghosh & Manipushpak Mitra & Bibhas Saha, 2015. "Privatization, Underpricing, and Welfare in the Presence of Foreign Competition," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 17(3), pages 433-460, June.
    16. Wang, Leonard F.S. & Tomaru, Yoshihiro, 2015. "The feasibility of privatization and foreign penetration," International Review of Economics & Finance, Elsevier, vol. 39(C), pages 36-46.
    17. repec:ehu:ikerla:32820 is not listed on IDEAS
    18. Toshihiro Matsumura & Yoshihiro Tomaru, 2015. "Mixed duopoly, location choice, and shadow cost of public funds," Southern Economic Journal, John Wiley & Sons, vol. 82(2), pages 416-429, October.
    19. Joaquín Andaluz, 2011. "Validity of the “Principle of Maximum Product Differentiation” in a unionized mixed-duopoly," Journal of Economics, Springer, vol. 102(2), pages 123-136, March.
    20. Wang, Leonard F.S. & Chen, Tai-Liang, 2011. "Mixed oligopoly, optimal privatization, and foreign penetration," Economic Modelling, Elsevier, vol. 28(4), pages 1465-1470, July.
    21. Sato, Susumu & Matsumura, Toshihiro, 2018. "Flexible Privatization Policy in Free-Entry Markets," MPRA Paper 88444, University Library of Munich, Germany.

    More about this item

    Keywords

    privatization; multi-subsidiary; mixed oligopoly;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejtec:v:19:y:2019:i:1:p:14:n:13. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.