Abstract
We analyze a mixed oligopoly with free entry by private …rms, assum-
ing that a public …rm maximizes an increasing function of output, subject
to a break-even constraint. We establish an irrelevance result: whenever a
mixed oligopoly is viable, then aggregate output, aggregate costs and wel-
fare are the same with and without the public …rm. However, replacing a
viable mixed oligopoly with a public monopoly yields higher net welfare.
Implications for privatization policy are suggested.
ing that a public …rm maximizes an increasing function of output, subject
to a break-even constraint. We establish an irrelevance result: whenever a
mixed oligopoly is viable, then aggregate output, aggregate costs and wel-
fare are the same with and without the public …rm. However, replacing a
viable mixed oligopoly with a public monopoly yields higher net welfare.
Implications for privatization policy are suggested.
Original language | English |
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Pages (from-to) | 767-769 |
Number of pages | 3 |
Journal | Economics Letters |
Volume | 117 |
Issue number | 3 |
DOIs | |
Publication status | Published - Dec 2012 |
Keywords
- Mixed oligopoly
- Entry
- Privatization