Partial Ownership for the Public Firm and Competition
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This paper investigates the issue of partial ownership (partial privatization) of a stateowned public enterprise. We elaborate on the framework of Matsumura (1998) by allowing for managerial inefficiency, and show that under moderate conditions partial ownership is a reasonable choice of government in a monopoly market as well as in a mixed duopoly market, where a public firm competes with a profit-maximizing private firm. We also provide some economic rationale on the result that neither full privatization nor full nationalization is optimum.
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