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Mixed Oligopoly, privatization and strategic trade policy: a note

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  • Sepahvand, Mehrdad
  • Cornes, Richard

Abstract

In debates over privatization and global competition mixed Cournot oligopoly models have been used to show that the presence of a state-owned enterprise in the host country is always associated with a distortionary effect that may justify privatization even if the public firm is just as efficient as its private counterparts. This study argues that this result is valid only under Cournot competition and Cournot competition is not a plausible modelling assumption in this context because in this type of market the firms’ simultaneous play strategies lack credibility.

Suggested Citation

  • Sepahvand, Mehrdad & Cornes, Richard, 2005. "Mixed Oligopoly, privatization and strategic trade policy: a note," MPRA Paper 3382, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:3382
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    File URL: https://mpra.ub.uni-muenchen.de/3382/1/MPRA_paper_3382.pdf
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    References listed on IDEAS

    as
    1. Hamilton, Jonathan H. & Slutsky, Steven M., 1990. "Endogenous timing in duopoly games: Stackelberg or cournot equilibria," Games and Economic Behavior, Elsevier, vol. 2(1), pages 29-46, March.
    2. Kenneth Fjell & Debashis Pal, 1996. "A Mixed Oligopoly in the Presence of Foreign Private Firms," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 737-743, August.
    3. William C. Merrill & Norman Schneider, 1966. "Government Firms in Oligopoly Industries: A Short-Run Analysis," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 80(3), pages 400-412.
    4. Debashis Pal & Mark D. White, 1998. "Mixed Oligopoly, Privatization, and Strategic Trade Policy," Southern Economic Journal, John Wiley & Sons, vol. 65(2), pages 264-281, October.
    5. Brander, James A., 1995. "Strategic trade policy," Handbook of International Economics, in: G. M. Grossman & K. Rogoff (ed.), Handbook of International Economics, edition 1, volume 3, chapter 27, pages 1395-1455, Elsevier.
    6. Fjell, Kenneth & Heywood, John S., 2004. "Mixed oligopoly, subsidization and the order of firm's moves: the relevance of privatization," Economics Letters, Elsevier, vol. 83(3), pages 411-416, June.
    7. Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
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    Cited by:

    1. Chen, Chien-Hsun & Mai, Chao-Cheng & Liu, Yu-Lin & Mai, Shin-Ying, 2009. "Privatization and optimal share release in the Chinese banking industry," Economic Modelling, Elsevier, vol. 26(6), pages 1161-1171, November.

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    More about this item

    Keywords

    Privatization; Mixed oligopoly; Strategic Trade Policy;
    All these keywords.

    JEL classification:

    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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