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Partial Privatization under Multimarket Price Competition

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  • Masuda, Taku
  • Sato, Susumu

Abstract

We investigate the effect of multimarket contacts on the privatization policy in mixed duopoly with price competition. There are two markets, one of which is served solely by the state-owned public firm, and the other is served by both public and private firms. Two markets are linked by the production technology of the public firm. In the general model, we first show that privatization is never optimal in the absence of multimarket contacts, i.e., if there is only one monopoly market or one duopoly market. Then, using a linear-quadratic specification, we show that a positive degree of privatization can be optimal in the presence of multimarket contacts. This result has an implication for the privatization policy in universal service sectors.

Suggested Citation

  • Masuda, Taku & Sato, Susumu, 2017. "Partial Privatization under Multimarket Price Competition," MPRA Paper 82269, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:82269
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    File URL: https://mpra.ub.uni-muenchen.de/82269/1/MPRA_paper_82269.pdf
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    References listed on IDEAS

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    Cited by:

    1. Akio Kawasaki, 2022. "Pricing Strategies and Partial Privatization Policy Based on Complementary Competitive Market," Journal of Industry, Competition and Trade, Springer, vol. 22(1), pages 99-123, March.
    2. Akio Kawasaki, 2023. "Pricing Strategies and Partial Privatization Policy," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 62(3), pages 293-319, May.
    3. Akio Kawasaki & Takao Ohkawa & Makoto Okamura, 2020. "Endogenous timing game in a mixed duopoly with partial foreign ownership and asymmetric increasing marginal costs," Australian Economic Papers, Wiley Blackwell, vol. 59(2), pages 71-87, June.

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    More about this item

    Keywords

    Multimarket contacts; partial privatization; state-owned public enterprise;
    All these keywords.

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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