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The endogenous objective function of a partially privatized firm: A Nash bargaining approach

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  • Kamijo, Yoshio
  • Tomaru, Yoshihiro

Abstract

We establish a model wherein a private firm competes with a partially privatized firm whose objective function is endogenously determined through bargaining between owners—the welfare-maximizing government and dividend-maximizing private shareholders. Many existing works on partial privatization have assumed that privatization increases the weight of profits in the partially privatized firm's objective, whereas it decreases the weight of welfare. However, our bargaining approach shows that this result can be reversed.

Suggested Citation

  • 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.
    • Handle: RePEc:eee:ecmode:v:39:y:2014:i:c:p:101-109
    DOI: 10.1016/j.econmod.2014.02.014
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    References listed on IDEAS

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    3. Dusanee Kesavayuth & Vasileios Zikos, 2016. "Price or Quantity? A New Irrelevance Result for Mixed Markets," Australian Economic Papers, Wiley Blackwell, vol. 55(1), pages 29-42, March.
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    6. Doriani Lingga & Damiana Simanjuntak, 2022. "Location Choice of a Partially–Private Monopoly Supplier," Studies in Microeconomics, , vol. 10(1), pages 106-121, June.
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    More about this item

    Keywords

    Mixed duopoly; Partial privatization; Bargaining; Nash solution;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory

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