Competition, Partial Privatization and Welfare: A General Analysis

Considering partial privatization of a public firm, this paper investigates the relative merits in terms of welfare between the Bertrand and Cournot outcomes in a mixed duopoly. To our surprise, social welfare may be higher under Cournot competition than under Bertrand if the public firm is partiall...

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Bibliographic Details
Published inJing ji lun wen cong kan Vol. 51; no. 1; pp. 1 - 14
Main Authors Chang, Ray-Yun, Hwang, Hong, Peng, Cheng-Hau
Format Journal Article
LanguageChinese
English
Published Taipei 臺灣大學經濟學系 2023
Taiwan Economic Review
Subjects
Competition
Duopoly
Equilibrium
Privatization
Profit maximization
Public companies
Subsidies
Welfare
部分民營化
社會福利
Cournot competition
Bertrand competition
partial privatization
welfare
數量競爭
價格競爭
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ISSN1018-3833
DOI10.6277/TER.202301_51(1).0001

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Summary:Considering partial privatization of a public firm, this paper investigates the relative merits in terms of welfare between the Bertrand and Cournot outcomes in a mixed duopoly. To our surprise, social welfare may be higher under Cournot competition than under Bertrand if the public firm is partially privatized. This result stands in stark contrast to the previous literature, which asserts that Bertrand competition is socially more desirable than Cournot if the public firm is completely privatized or completely state-owned.
Bibliography:ObjectType-Article-1
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ISSN:1018-3833
DOI:10.6277/TER.202301_51(1).0001