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Endogenous Timing with Government's Preference and Privatization

Kangsik, Choi (2009): Endogenous Timing with Government's Preference and Privatization.

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Abstract

By introducing the government's preference for tax revenues into an extended game with observable delay, this study provides new insight into the trade-off between the government and the public firm's payoff in a government's optimal policy of privatization. The results show that: (i) regardless of the government's preference for tax revenues, the government does not have an incentive to privatize in an endogenous timing context even though there are conflicts of interest between the public firm and the government and (ii) under a mixed duopoly, each sequential-move equilibrium varies with the level of the government's preference for tax revenues.

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