Endogenous Cost Differentials between Public and Private Enterprises: A Mixed Duopoly Approach

Matsumura, Toshihiro; Matsushima, Noriaki

doi:10.1111/j.0013-0427.2004.00394.x

Cited by 164 publications

(124 citation statements)

References 37 publications

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“…In addition, Martin and Parker (1997) suggested that corporate performance can either increase or decrease after privatization, based on their study in the United Kingdom. See Matsumura and Matsushima (2004) for a theoretical discussion of the endogenous cost differences between public and private enterprises.…”

Section: Modelmentioning

confidence: 99%

An analysis of entry-then-privatization model: welfare and policy implications

2017

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This study formulates a new model of mixed oligopolies in free entry markets. A stateowned public enterprise is established before the game, private enterprises enter the market, and then the government chooses the degree of privatization of the public enterprise (termed the entry-then-privatization model herein). We find that under general demand and cost functions, the timing of privatization does not affect consumer surplus or the output of each private firm, while it does affect the equilibrium degree of privatization, number of entering firms, and output of the public firm. The equilibrium degree of privatization is too high (low) for both domestic and world welfare if private firms are domestic (foreign). JEL classification H42, L13

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Section: Modelmentioning

confidence: 99%

An analysis of entry-then-privatization model: welfare and policy implications

2017

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“…As shown in Matsumura and Matsushima (2004), when both firms maximize their profits, they choose excessive R&D investment to gain competitive advantages in the following location-pricing game. The equilibrium results are as follows: …”

Section: Lemma 2 (No Privatization) When One Public Firm Competes Agamentioning

confidence: 99%

“…And if a private investor wants to start her own gas station, she chooses the location of the station and the retail price of the gasoline, but buys the gasoline from CNPC or Sinopec (another public firm in China). 6 It has been found that in the Hotelling model, the existence of a public firm can guarantee the social optimal location and pricing equilibrium under various settings like symmetric costs (Cremer, Marchand, and Thisse 1991), asymmetric costs (Matsumura and Matsushima 2004), and with subcontracting between firms (Shuai 2016). Thus any kind of privatization of the retailer reduces the social welfare.…”

Section: Propositionmentioning

confidence: 99%

“…So far, our setup is the same as that of Matsumura and Matsushima (2004). What differs our model from theirs is that we assume that the government privatizes the manufacturer of the public firm instead of the entire public firm.…”

Section: Introductionmentioning

confidence: 99%

“…Before we proceed to analyze the two cases, we first present some established results from Matsumura and Matsushima (2004) as benchmarks. To ease exposition, we use superscript to denote social optimal equilibrium, to denote the equilibrium when the public firm is not privatized, and to denote the equilibrium when the public firm is privatized in its entirety.…”

Section: Introductionmentioning

confidence: 99%

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Privatizing Multi-subsidiary Public Firm in Location Model

Chen¹,

Shuai

2017

The B.E. Journal of Theoretical Economics

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Abstract:This paper examines a different way of privatization from existing literature. In a mixed duopoly Hotelling type model in which the public firm consists of multiple subsidiaries, instead of privatizing the public firm as its entirety, the government may privatize only one of the subsidiaries (for example the manufacturing subsidiary). We find that this kind of privatization always improves social welfare comparing to no privatization at all. And comparing to privatizing the public firm in its entirety, privatizing only the manufacturing subsidiary always results in larger consumer welfare and results in larger social welfare when transport cost or R&D cost is sufficiently large.

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Should developing countries ban dual practice by physicians? Analysis under mixed hospital competition

2022

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This paper examines a widely observed phenomenon of dual practice by physicians in many countries, where physicians employed in the public sector also work in the private sector, which is often in competition with the public provider that employs them. 1 Dual practice by physicians impacts the quality of healthcare that patients receive and has implications on the competition between the public and private hospitals and, ultimately, affects the overall welfare of a society. In the context of developing countries, physician dual practice, perhaps driven by a burgeoning private healthcare market arising from poor provision of public healthcare along with limited monitoring power of health authorities can be a significant issue. 2 At the heart of the matter are serious policy questions on whether dual practice by physicians under mixed competition is beneficial to society? Does it have negative impact on public health services? Should developing countries with limited regulatory and monitoring power be better off by restricting dual practice?To address these questions we develop a multi-stage game, where both public and private hospitals strategically compete for patients and talented physicians. Talented physicians have skills such as highly specialized training and expertise, significant experience and reputation, which leads to direct and substantial improvement in patient welfare. 3 This is relevant in the context of developing countries where quality of medical care vary across different hospitals and can often fall short. 4 Therefore talented physicians, with skills that improve patient outcomes, are in demand by both public and private sector hospitals. 5 We treat aggregate hospital quality as comprising of care provided by the talented physicians and general medical care (which includes hospital facilities, service of general physicians, waiting times, diagnostic tests, auxiliary medical care, among others). 6 Talented physicians choose the amount of service they provide in the public and private hospitals depending on the

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Endogenous Cost Differentials between Public and Private Enterprises: A Mixed Duopoly Approach

Cited by 164 publications

References 37 publications

An analysis of entry-then-privatization model: welfare and policy implications

An analysis of entry-then-privatization model: welfare and policy implications

Privatizing Multi-subsidiary Public Firm in Location Model

Should developing countries ban dual practice by physicians? Analysis under mixed hospital competition

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