Abstract
This chapter outlines the basic properties of an international mixed oligopoly and considers the policy implications of privatization in the context of a strategic trade policy. We show here that the government sets a low level of privatization to reduce the profit of foreign firms in a non-corporative equilibrium. In a free-entry equilibrium, the number of private firms affects the degree of privatization in an international mixed oligopoly model. We present the complimentary relationship between import tariffs and the degree of privatization. Furthermore, we consider a corporative privatization policy. Regarding a non-corporative equilibrium, a higher degree of privatization in both countries improves global welfare.
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Notes
- 1.
A similar condition is imposed in Seade (1980).
- 2.
Unfortunately, in the present study, we were unable to derive the relative difference of privatization levels between domestic and international cases.
- 3.
The output of the private firms is obtained as follows:
\( \left[\begin{array}{cc}\hfill b\left(n+1\right)+k\hfill & \hfill bm\hfill \\ {}\hfill bn\hfill & \hfill b\left(m+1\right)+k\hfill \end{array}\right]\left[\begin{array}{c}\hfill {q}_d\hfill \\ {}\hfill {q}_f\hfill \end{array}\right]=\left[\begin{array}{c}\hfill a-b{q}_0\hfill \\ {}\hfill a-b{q}_0-t\hfill \end{array}\right], \) where \( {q}_d={\Delta}^{-1}\left[\left(a-b{q}_0\right)\left(b+k\right)+tbm\right],{q}_f={\Delta}^{-1}\Big[\left(a-b{q}_0\right)\left(b+k\right)-t\left[bn+\left(b+k\right)\right],\ \Delta =\left(b+k\right)\left[b\left(n+m\right)+\left(b+k\right)\right] \) and \( {q}_d-{q}_f=t\left[b\left(n+m\right)+\left(b+k\right)\right]=\frac{t\Delta}{\left(b+k\right)} \)
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Shinozaki, T., Kunizaki, M., Nakamura, K. (2017). International Mixed Oligopoly. In: Yanagihara, M., Kunizaki, M. (eds) The Theory of Mixed Oligopoly. New Frontiers in Regional Science: Asian Perspectives, vol 14. Springer, Tokyo. https://doi.org/10.1007/978-4-431-55633-6_5
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DOI: https://doi.org/10.1007/978-4-431-55633-6_5
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