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Undesirable competition

Author

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  • Wang, Leonard F.S.
  • Mukherjee, Arijit
Abstract
We show that the entry of private profit-maximising firms makes the consumers worse off compared to having a nationalised monopoly. Such entry increases the nationalised firm’s profit, industry profit, and social welfare, at the expense of the consumers. Our result is important for competition policy.

Suggested Citation

  • Wang, Leonard F.S. & Mukherjee, Arijit, 2012. "Undesirable competition," Economics Letters, Elsevier, vol. 114(2), pages 175-177.
    • Handle: RePEc:eee:ecolet:v:114:y:2012:i:2:p:175-177
    DOI: 10.1016/j.econlet.2011.09.021
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    References listed on IDEAS

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    6. Arijit Mukherjee & Laixun Zhao, 2017. "Profit Raising Entry," Journal of Industrial Economics, Wiley Blackwell, vol. 65(1), pages 214-219, March.
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    10. Rosenthal, Robert W, 1980. "A Model in Which an Increase in the Number of Sellers Leads to a Higher Price," Econometrica, Econometric Society, vol. 48(6), pages 1575-1579, September.
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    12. repec:bla:ausecp:v:41:y:2002:i:3:p:267-81 is not listed on IDEAS
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    Citations

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    Cited by:

    1. Xu, Lili & Lee, Sang-Ho, 2020. "Strategic Relations between Corporate Social Responsibility and Partial Privatization Policy with Foreign Penetration," MPRA Paper 100770, University Library of Munich, Germany.
    2. Matsumura, Toshihiro & Sunada, Takeaki, 2013. "Advertising competition in a mixed oligopoly," Economics Letters, Elsevier, vol. 119(2), pages 183-185.
    3. 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.
    4. Junichi Haraguchi & Toshihiro Matsumura, 2020. "Endogenous public and private leadership with diverging social and private marginal costs," Manchester School, University of Manchester, vol. 88(5), pages 699-730, September.
    5. Soumyananda Dinda & Arijit Mukherjee, 2014. "A Note on the Adverse Effect of Competition on Consumers," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 16(1), pages 157-163, February.
    6. Cheng, Long & Heywood, John S. & Ye, Guangliang, 2019. "Partial acquisition with an excluded public rival," International Review of Economics & Finance, Elsevier, vol. 59(C), pages 164-173.
    7. Ohnishi, Kazuhiro, 2018. "Stackelberg Mixed Triopoly Games with State-Owned, Labour-Managed and Capitalist Firms," MPRA Paper 88222, University Library of Munich, Germany.
    8. Kosuke Hirose & Toshihiro Matsumura, 2019. "Comparing welfare and profit in quantity and price competition within Stackelberg mixed duopolies," Journal of Economics, Springer, vol. 126(1), pages 75-93, January.
    9. Junichi Haraguchi & Toshihiro Matsumura, 2021. "Profit‐enhancing entries in mixed oligopolies," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 33-55, July.
    10. Chen, Yi-Wen & Yang, Ya-Po & Wang, Leonard F.S. & Wu, Shih-Jye, 2014. "Technology licensing in mixed oligopoly," International Review of Economics & Finance, Elsevier, vol. 31(C), pages 193-204.
    11. Toshihiro Matsumura & Akira Ogawa, 2017. "Inefficient but Robust Public Leadership," Journal of Industry, Competition and Trade, Springer, vol. 17(4), pages 387-398, December.
    12. Wen, Jun & Diao, Yu & Wang, Leonard F. S. & Sun, Ji, 2022. "Privatization, entry and corporate social responsibility with consumer cognition," MPRA Paper 115169, University Library of Munich, Germany.
    13. Han, Tien-Der & Mukherjee, Arijit, 2023. "Mergers of complements, endogenous product differentiation and welfare," Mathematical Social Sciences, Elsevier, vol. 126(C), pages 30-41.
    14. Gelves, Juan Alejandro & Heywood, John S., 2016. "How does a mixed ownership firm license a patent?," Economic Modelling, Elsevier, vol. 59(C), pages 278-284.
    15. Wang, Leonard F.S. & Lee, Jen-yao, 2013. "Foreign penetration and undesirable competition," Economic Modelling, Elsevier, vol. 30(C), pages 729-732.
    16. Shaohua Han & John S. Heywood & Guangliang Ye, 2017. "Informative Advertising in a Mixed Oligopoly," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 51(1), pages 103-125, August.
    17. Heywood, John S. & Wang, Zerong & Ye, Guangliang, 2023. "Spatial price discrimination in a mixed duopoly input market," Regional Science and Urban Economics, Elsevier, vol. 102(C).
    18. Lili Xu & Fanrui Su & Sang-Ho Lee, 2023. "Strategic corporate social responsibility and partial privatization policy with foreign penetration," The Japanese Economic Review, Springer, vol. 74(2), pages 251-278, April.
    19. John S. Heywood & Shiqiang Wang & Guangliang Ye, 2021. "Partial Privatization Upstream with Spatial Price Discrimination Downstream," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 59(1), pages 57-78, August.

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    More about this item

    Keywords

    Competition; Consumer surplus; Nationalised firm;
    All these keywords.

    JEL classification:

    • L32 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Public Enterprises; Public-Private Enterprises
    • L44 - Industrial Organization - - Antitrust Issues and Policies - - - Antitrust Policy and Public Enterprise, Nonprofit Institutions, and Professional Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • H00 - Public Economics - - General - - - General
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection

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