[go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/cor/louvco/1996045.html
   My bibliography  Save this paper

Privatization and Efficiency in a Differentiated Industry

Author

Listed:
  • ANDERSON, Simon

    (University of Virginia)

  • de PALMA, André

    (THEMA, Université de Cergy-Pontoise)

  • THISSE, Jacques-François

    (Center for Operations Research and Econometrics (CORE), Université catholique de Louvain (UCL), Louvain la Neuve, Belgium and CERAS-ENPC)

Abstract
We consider a market in which a public firm competes against private ones, and ask what happens when the public firm is privatized. In the short run, privatization is harmful because prices rise: the disciplinary role of the public firm is lost. In the long run, privatization leads to further entry; the net effect is beneficial if consumer preference for variety is not too weak. A sufficient statistic for the social surplus to he higher in the long run is that the public firm makes a loss. This suggests that profitable firma should not necessarily be privatized.

Suggested Citation

  • ANDERSON, Simon & de PALMA, André & THISSE, Jacques-François, 1996. "Privatization and Efficiency in a Differentiated Industry," LIDAM Discussion Papers CORE 1996045, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvco:1996045
    as

    Download full text from publisher

    File URL: https://sites.uclouvain.be/core/publications/coredp/coredp1996.html
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Michael Spence, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 43(2), pages 217-235.
    2. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law and Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
    3. Curtis Eaton, B. & Lipsey, Richard G., 1989. "Product differentiation," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 12, pages 723-768, Elsevier.
    4. Barros, Fatima & Modesto, Leonor, 1999. "Portuguese banking sector: a mixed oligopoly?," International Journal of Industrial Organization, Elsevier, vol. 17(6), pages 869-886, August.
    5. John Vickers & George Yarrow, 1991. "Economic Perspectives on Privatization," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 111-132, Spring.
    6. Dixit, Avinash K & Stiglitz, Joseph E, 1977. "Monopolistic Competition and Optimum Product Diversity," American Economic Review, American Economic Association, vol. 67(3), pages 297-308, June.
    7. Lawson, Colin, 1994. "The Theory of State-Owned Enterprises in Market Economies," Journal of Economic Surveys, Wiley Blackwell, vol. 8(3), pages 283-309, September.
    8. Kay, J A & Thompson, D J, 1986. "Privatisation: A Policy in Search of a Rationale," Economic Journal, Royal Economic Society, vol. 96(381), pages 18-32, March.
    9. Cremer, Helmuth & Marchand, Maurice & Thisse, Jacques-Francois, 1991. "Mixed oligopoly with differentiated products," International Journal of Industrial Organization, Elsevier, vol. 9(1), pages 43-53, March.
    10. Estrin, Saul & Perotin, Virginie, 1991. "Does ownership always matter?," International Journal of Industrial Organization, Elsevier, vol. 9(1), pages 55-72, March.
    11. de Fraja, Giovanni & Delbono, Flavio, 1990. "Game Theoretic Models of Mixed Oligopoly," Journal of Economic Surveys, Wiley Blackwell, vol. 4(1), pages 1-17.
    12. De Fraja, Giovanni, 1991. "Efficiency and Privatisation in Imperfectly Competitive Industries," Journal of Industrial Economics, Wiley Blackwell, vol. 39(3), pages 311-321, March.
    13. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 995-1025.
    14. Vickers, John, 1985. "Delegation and the Theory of the Firm," Economic Journal, Royal Economic Society, vol. 95(380a), pages 138-147, Supplemen.
    15. de Fraja, Giovanni & Delbono, Flavio, 1989. "Alternative Strategies of a Public Enterprise in Oligopoly," Oxford Economic Papers, Oxford University Press, vol. 41(2), pages 302-311, April.
    16. Richard G. Harris & Elmer G. Wiens, 1980. "Government Enterprise: An Instrument for the Internal Regulation of Industry," Canadian Journal of Economics, Canadian Economics Association, vol. 13(1), pages 125-132, February.
    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. Joan-Ramon Borrell & Carlos Suarez, 2021. ""Mixed oligopoly and predatory public firms"," IREA Working Papers 202116, University of Barcelona, Research Institute of Applied Economics, revised Sep 2021.
    2. Stefan Buehler & Simon Wey, 2014. "When Do State-Owned Firms Crowd Out Private Investment?," Journal of Industry, Competition and Trade, Springer, vol. 14(3), pages 319-330, September.
    3. Lambertini, Luca & Tampieri, Alessandro, 2015. "Incentives, performance and desirability of socially responsible firms in a Cournot oligopoly," Economic Modelling, Elsevier, vol. 50(C), pages 40-48.
    4. Benassi, Corrado & Castellani, Massimiliano & Mussoni, Maurizio, 2016. "Price equilibrium and willingness to pay in a vertically differentiated mixed duopoly," Journal of Economic Behavior & Organization, Elsevier, vol. 125(C), pages 86-96.
    5. Luca Lambertini & Arsen Palestini & Alessandro Tampieri, 2016. "CSR in an Asymmetric Duopoly with Environmental Externality," Southern Economic Journal, John Wiley & Sons, vol. 83(1), pages 236-252, July.
    6. Pradeep Kautish, 2010. "Study On Impact Of Environmental Change On Selected Public Sector Enterprises In India," Romanian Economic Business Review, Romanian-American University, vol. 5(2), pages 68-88, June.
    7. 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.
    8. Germà Bel, 2010. "Against the mainstream: Nazi privatization in 1930s Germany1," Economic History Review, Economic History Society, vol. 63(1), pages 34-55, February.
    9. Koji Ishibashi & Toyokazu Kaneko, 2008. "Partial privatization in mixed duopoly with price and quality competition," Journal of Economics, Springer, vol. 95(3), pages 213-231, December.
    10. J Hindriks & D Claude, 2006. "Strategic Privatization and Regulation Policy in Mixed Markets," The IUP Journal of Managerial Economics, IUP Publications, vol. 0(1), pages 7-26, February.
    11. Ali Dadpay, 2020. "An Analysis of Fuel Smuggling in the Middle East as a Single Multinational Market," Journal of Industry, Competition and Trade, Springer, vol. 20(4), pages 643-656, December.
    12. João Correia-da-Silva & Joana Pinho, 2018. "Collusion in mixed oligopolies and the coordinated effects of privatization," Journal of Economics, Springer, vol. 124(1), pages 19-55, May.
    13. 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.
    14. Flavio Delbono & Luca Lambertini, 2016. "Nationalization as Credible Threat Against Collusion," Journal of Industry, Competition and Trade, Springer, vol. 16(1), pages 127-136, March.
    15. Druk-Gal, Bat-Sheva & Yaari, Varda, 2006. "Incumbent employees' resistance to implementing privatization policy," Journal of Economic Behavior & Organization, Elsevier, vol. 59(3), pages 374-405, March.
    16. L. Lambertini & A. Palestini & A. Tampieri, 2014. "CSR in an Asymmetric Duopoly with Environmental Externalities," Working Papers wp959, Dipartimento Scienze Economiche, Universita' di Bologna.
    17. Arghya Ghosh & Manipushpak Mitra, 2008. "Comparing Bertrand and Cournot Outcomes in the Presence of Public Firms," Discussion Papers 2008-18, School of Economics, The University of New South Wales.
    18. Willner, Johan, 1999. "Policy objectives and performance in a mixed market with bargaining," International Journal of Industrial Organization, Elsevier, vol. 17(1), pages 137-145, January.
    19. Caroline Stiel & Astrid Cullmann & Maria Nieswand, 2015. "Productivity in Electricity Retail after Market Liberalisation: Analysing the Effects of Ownership and Firm's Governance Structure," Discussion Papers of DIW Berlin 1531, DIW Berlin, German Institute for Economic Research.
    20. Chen, Gongmeng & Firth, Michael & Rui, Oliver, 2006. "Have China's enterprise reforms led to improved efficiency and profitability?," Emerging Markets Review, Elsevier, vol. 7(1), pages 82-109, March.

    More about this item

    Keywords

    privatization; mixed oligopoly; product differentiation;
    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:cor:louvco:1996045. 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: Alain GILLIS (email available below). General contact details of provider: https://edirc.repec.org/data/coreebe.html .

    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.