Abstract
A general model of Cournot mixed oligopoly with partial privatization of a public firm is formulated, and the existence and stability of a unique equilibrium and optimality of partial privatization are proved under fundamental assumptions allowing for general inverse market demand and firm’ cost functions. The stability condition which is derived on the basis of a stability theorem for a dynamic system for an aggregative game is interpreted from economic point of view for some simple cases, and is specified for Cournot mixed duopoly with partial privatization. The stability condition is also compared with the one for Cournot oligopoly with only private firms.
Similar content being viewed by others
References
Beato, P., and Mas-Colell, A., 1984. The marginal cost pricing as a regulation mechanism in mixed markets. In: M. Maarchand, P. Pestieau, and H. Tulkens, eds. The Performance of Public Enterprises. Amsterdam: North-Holland, pp.81–100.
Boes, D., 1986. Public enterprise economics. Amsterdam: North-Holland.
Boes, D., 1991. Privatization: A theoretical analysis. Oxford: Clarendon Press.
Bulow, J., Geanakoplos, J., and Klemperer, P., 1985. Multimarket oligopoly: Strategic substitute and complements. Journal of Political Economy, 93(3), pp.488–511.
Chang, W.W., 2007. Optimal trade, industrial privatization policies in a mixed duopoly with strategic managerial incentives. Journal of International Trade and Economic Development, 16(1), pp.31–52.
Claude, D. and Hindricks, J., 2006. Strategic privatization and regulation policy in mixed markets. IUP Journal of Managerial Economics, 4(1), pp.7–26.
Corchon, L.C., 1994. Comparative statics for aggregative games: Strong concavity case. Mathematical Social Sciences, 28(3), pp.151–165.
Cremer, H., Marchand, M., and Thisse, J.F., 1989. The public firm as an instrument for regulating an oligopolistic market. Oxford Economic Papers, 41(2), pp.283–301.
De Fraja, G. and Delbono, F., 1989. Alternative strategies of a public enterprise in oligopoly. Oxford Economic Papers, 41(2), pp.302–311.
De Fraja, G. and Delbono, F., 1990. Game theoretic models of mixed oligopoly. Journal of Economic Surveys, 4(1), pp.1–17.
Friedman, J.W., 1982. Oligopoly theory. In: K.J. Arrow and M.D. Intriligator, eds. Handbook of mathematical economics. Amsterdam: North-Holland, pp.491–453.
Gupta, N., 2005. Partial privatization and firm performance. Journal of Finance. 60(2), pp.987–1015.
Hahn, F.H., 1962. The stability of the Cournot oligopoly solution. Review of Economic Studies, 29(4), pp.329–331.
Harris, R.G. and Wiens, E.G., 1980. Government enterprise: An instrument for the internal regulator of industry. Canadian Journal of Economics, 13(1), pp.125–132.
Kopel, M., 2009. Oligopoly dynamics. In: J.B. Rosser, Jr., ed. Handbook of research on complexity. UK: Edward Elgar. Ch.6.
Levin, D., 1985. Taxation within Cournot oligopoly. Journal of Public Economics, 27(3), pp.281–290.
Matsumura, T., 1998. Partial privatization in mixed duopoly. Journal of Public Economics, 70(3), pp.473–483.
Maw, J., 2002. Partial privatization in transition economies. Economic Systems, 26(3), pp.271–282.
Merrill, W.C. and Schneider, N., 1966. Government firms in oligopoly industry: A short run analysis. Quarterly Journal of Economics, 80(3), pp.400–412.
Myles, G.D., 2002. Mixed oligopoly, subsidization and the order of firm’s moves: An irrelevance result for the general case. Economics Bulletin, 12(1), pp.1–6.
Nellis, J., 1998. Privatization in transition economies: An update. In: H.G. Broadman, ed. Case-by-case privatization in the Russian Federation: Lessons from international experience. World Bank Discussion Paper, 385. Washington: World Bank, pp.13–28.
Okuguchi, K., 1964. The stability of the Cournot solution: A further generalization. Review of Economic Studies, 31(2), pp.143–146.
Okuguchi, K., 1976. Expectations and stability in oligopoly models. Berlin, Heidelberg, and N.Y.: Springer-Verlag.
Okuguchi, K., 1993. Unified approach to Cournot models: Oligopoly, taxation and aggregate provision of a pure public good. European Journal of Political Economy, 9(2), pp.233–245.
Okuguchi, K. and Yamazaki, T., 2008. Global stability of unique Nash equilibrium in Cournot oligopoly and rent-seeking game. Journal of Economic Dynamics and Control, 32(4), pp.1204–1211.
Okuguchi, K., 2009. Partial privatization in Cournot and Stackelberg oligopolies [Available upon request to the author].
Selten, R., 1970. Preispolitik der mehrproduktunternehmung in der statischen theorie [Price policy of multi-product firm in static theory]. Berlin, Heidelberg, and N.Y.: Springer-Verlag.
Szidarovszky, F. and Okuguchi, K., 2010. Existence, uniqueness and global stability of equilibrium in Cournot oligopoly with cost externalities. Mathematica Pannonia, 21(2), pp.275–283.
Szidarovszky, F. and Yakowitz, S., 1977. A new proof of the existence and uniqueness of the Cournot oligopoly. International Economic Review, 18(3), pp.787–789.
Theocharis, R.D., 1960. On the stability of the Cournot solution of the oligopoly problem. Review of Economic Studies, 27(2), pp.133–134.
Vives, X., 1999. Oligopoly pricing. Cambridge, Mass.: MIT Press.
Wang, L.F.S., Wang, Y.C., and Zhao, L., 2009. Privatization and the environment in a mixed duopoly with pollution abatement. Economics Bulletin, 29(4), pp.3112–3119.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Okuguchi, K. General Analysis of Cournot Mixed Oligopoly with Partial Privatization. Eurasian Econ Rev 2, 48–62 (2012). https://doi.org/10.14208/BF03353832
Published:
Issue Date:
DOI: https://doi.org/10.14208/BF03353832