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Mixed Oligopoly, privatization and strategic trade policy: a note

Sepahvand, Mehrdad and Cornes, Richard (2005): Mixed Oligopoly, privatization and strategic trade policy: a note.

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In debates over privatization and global competition mixed Cournot oligopoly models have been used to show that the presence of a state-owned enterprise in the host country is always associated with a distortionary effect that may justify privatization even if the public firm is just as efficient as its private counterparts. This study argues that this result is valid only under Cournot competition and Cournot competition is not a plausible modelling assumption in this context because in this type of market the firms’ simultaneous play strategies lack credibility.

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