Munich Personal RePEc Archive

Flexible Privatization Policy in Free-Entry Markets

Sato, Susumu and Matsumura, Toshihiro (2018): Flexible Privatization Policy in Free-Entry Markets.

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We investigate a mixed oligopoly in a free-entry market in the presence of shadow cost of public funding. The government chooses the degree of privatization before the entry of private firms and then adjusts the degree of privatization after the entry. We show that a pre-entry privatization policy may serve as a commitment device if the foreign ownership share of private firms is moderate, and substitutes the ideal privatization policy with complete commitment if the equilibrium pre-entry privatization policy is partial privatization.

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