Optimal privatization policy with Bertrand competition

Chiou, Jiunn Rong

doi:10.1016/j.iref.2017.12.008

Cited by 9 publications

(5 citation statements)

References 25 publications

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“…As explained in Appendix A, the optimal level of privatization for CB is a consequence of Proposition 1, which establishes an upper limit for α for stability to exist in that subgame. The optimal level of privatization for BB is similar to Wang and Chiou (2018), who consider differences in efficiency between a mixed firm and a private firm in a Bertrand setting and obtain that the optimal privatization policy is complete nationalization when the public firm cost is close to the private firm cost. In our analysis, a complete nationalization of the mixed firm is also optimal in the CB subgame if product differentiation is not sufficiently low.…”

Section: Firms Move Firstmentioning

confidence: 75%

“…Examples in a Cournot setting are Matsumura and Kanda (2005) analyzing the influence of free entry, Fujiwara (2007) deals with the effects on product variety, Matsumura and Shimizu (2010) studies sequential privatization, Han and Ogawa (2012) consider the effects on advertising expenditures, and Nakamura and Takami (2015) consider that the strategies of a privatized firm are determined through bargaining between the private sector and the public sector. On the other hand, examples in a Bertrand setting are Isibashi and Kaneko (2008), who study quality competition, Xu et al (2016), who compare emission taxes and privatization policies, and Tomaru and Wang (2018), Wang and Chiou (2018), and Choi (2019), who consider the role of lower efficiency in the public firm.…”

Section: Introductionmentioning

confidence: 99%

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Partial privatization with endogenous choice of strategic variable

Méndez-Naya

Novo-Peteiro

2022

Manage Decis Econ

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This paper analyzes the optimal privatization policy when firms endogenously choose their strategic variable. The level of privatization is shown to determine: (i) the choice of strategic variable, whereby an asymmetric equilibrium could emerge (either Cournot–Bertrand or Bertrand–Cournot); (ii) the stability of equilibrium when the partially privatized firm and the private firm choose quantity and price respectively as the strategic variable; and (iii) the level of welfare, whereby Cournot–Cournot and Bertrand–Cournot games could lead to a greater welfare than the Bertrand–Bertrand model.

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Section: Firms Move Firstmentioning

confidence: 75%

Section: Introductionmentioning

confidence: 99%

Partial privatization with endogenous choice of strategic variable

Méndez-Naya

Novo-Peteiro

2022

Manage Decis Econ

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“…The second category includes studies where privatization is further classified into two parts: privatization as a discrete variable (See Anderson et al [3], Barcena-Ruiz and Garzon [5].) and privatization as a continuous variable (see Matsumura [22], Fujiwara [13], Ohnishi [26], Ohnishi [27], Wang and Chen [34], Wang and Chiou [35], Wang and Chiou [36], Wen and Yuan [37]. ).…”

Section: Related Literaturementioning

confidence: 99%

Reversal of Bertrand-Cournot Ranking for Optimal Privatization Level

Paul,

2023

Preprint

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We analyze a mixed duopoly market with a public and a private firm competing in the downstream market. The public firm is partially privatized and a regulator decides on the privatization level to maximize welfare. A foreign monopolist supplies a key input for producing the final commodity, and may use uniform or discriminatory pricing; we observe the presence of a foreign monopolist that practices price discrimination can lead to the privatization of a public firm. The overall findings show, that under uniform pricing, Cournot competition leads to higher privatization levels, while under discriminatory pricing, Bertrand competition leads to higher privatization levels. The sensitivity of Cournot-Bertrand rankings to substitutability depends on the pricing regime. JEL classification code: D4, D6, H4, L1,L2

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“…There have been considerable empirical and theoretical works on the theory of mixed oligopolies, which derive from the groundbreaking contribution of Cremer et al (1989). The latest relevant works include Wang and Chiou (2018), Colombo and Labrecciosa (2021) and Da Silva et al (2022). Compared with these works, the providers in our model compete not only in price and quantity, but they compete also in quality, which is not an issue in the above works.…”

Section: Literature Reviewmentioning

confidence: 99%

Optimal Funding Strategy and Quality Competition in a Mixed Oligopoly

Fu,

Xiang,

Hou

2023

TEL

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We study the optimal strategy of a public funding scheme in a mixed oligopoly market with one welfare-maximizing public provider and two heterogeneous private providers with distinguishing marginal costs, where all providers compete on quality and where providers included in the funding scheme gain quantity compensation. We find that the first-order optimal solution can only be implemented when the private providers are included in the funding scheme. However, an increase in the private providers' homogeneous quantity compensation has no effect on the quality gap or price gap between the two private providers, while the increase in the heterogeneous one will impact both the quality and price gap.

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Optimal privatization policy with Bertrand competition

Cited by 9 publications

References 25 publications

Partial privatization with endogenous choice of strategic variable

Partial privatization with endogenous choice of strategic variable

Reversal of Bertrand-Cournot Ranking for Optimal Privatization Level

Optimal Funding Strategy and Quality Competition in a Mixed Oligopoly

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