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Competition and Privatisation Policies in a Differentiated Mixed Oligopoly: The Pay‐off‐interdependence Approach
Author(s) -
Nakamura Yasuhiko
Publication year - 2018
Publication title -
australian economic papers
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.351
H-Index - 15
eISSN - 1467-8454
pISSN - 0004-900X
DOI - 10.1111/1467-8454.12111
Subject(s) - oligopoly , product differentiation , competition (biology) , microeconomics , degree (music) , marginal cost , economics , product market , industrial organization , cournot competition , incentive , ecology , physics , acoustics , biology
I revisit the relationship between competition and privatisation policies in a mixed oligopoly with differentiated goods, following the pay‐off‐interdependence approach in the fashion of Matsumura and Okamura. We find that although the intensity of market competition increases with the degree of importance of each firm's relative performance, the optimal degree of privatisation can decrease in a differentiated goods mixed oligopoly in both the increasing marginal costs case and the constant marginal costs case. Further, given the degree of importance of each firm's relative performance and the number of private firms, we find that the optimal degree of privatisation can decrease as the degree of product differentiation declines. Finally, by considering an alternative‐pay‐off model in both cases, we compare the optimal degree of privatisation of the public firm.