Market structure, production efficiency, and privatization

Ya Po Yang, Shih Jye Wu, Jin-Li Hu*

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

In order to analyze the optimal degree of privatizing an upstream public firm, this paper sets up a vertically related market that consists of an upstream mixed oligopoly with one public firm and m private firms and a downstream oligopoly with n private firms. The major findings of this paper areas follows: If the marginal production cost of input increases slowly (rapidly), then the optimal degree for privatizing a public upstream firm increases (decreases) with the number of downstream firms. If the marginal production cost of input increases moderately, then the optimal degree for privatizing the public upstream firm first increases and then decreases with the number of downstream firms. If the marginal production cost of input is constant, then the optimal degree for privatizing a public upstream firm always increases with the number of downstream firms.

Original languageEnglish
Pages (from-to)89-108
Number of pages20
JournalHitotsubashi Journal of Economics
Volume55
Issue number1
DOIs
StatePublished - 1 Jun 2014

Keywords

  • Intermediate goods
  • Mixed oligopoly
  • Privatization
  • Vertically related market upstream market

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