Mixed Oligopoly and Public Enterprises

This Element provides a review and synthesis of the theoretical analysis of mixed oligopoly, a hybrid market structure in which public and private firms interact, using a variety of strategic variables. It discusses privatization and partial-privatization of public firms, as well as applications in industrial organization, applied microeconomic theory, innovation, international trade, and environment policy. It also discusses ways to study the interaction between providers of public sector services.

Format: Paperback / softback
Length: 60 pages
Publication date: 06 June 2024
Publisher: Cambridge University Press

This element provides a comprehensive review and synthesis of the theoretical analysis of mixed oligopoly, a hybrid market structure that involves the interaction of public (state-owned) and private firms. A distinctive characteristic of mixed oligopoly is the diverse objectives pursued by these firms. Public firms, driven by the pursuit of social welfare, aim to maximize societal benefits, while private firms prioritize profit maximization. The authors also explore the privatization and partial-privatization of public firms, discussing their applications across various subfields such as industrial organization, applied microeconomic theory, innovation, international trade, and environment policy. Furthermore, the authors delve into the enrichment of the original analysis to study the interplay between providers of public sector services, distinguishing it from traditional goods.

Introduction:
Mixed oligopoly is a market structure that combines elements of both pure monopoly and pure competition, creating a complex and dynamic environment. In this structure, public and private firms interact and compete with each other, utilizing a variety of strategic variables to gain an advantage. The theoretical analysis of mixed oligopoly has been an important area of study in economics, as it provides insights into the behavior of firms in a market with mixed ownership and competition.

Review of Theoretical Analysis:
The theoretical analysis of mixed oligopoly has been approached from various perspectives, including game theory, industrial organization, and applied microeconomic theory. One of the key insights of mixed oligopoly is that firms have different objectives and strategies. Public firms, driven by the pursuit of social welfare, aim to maximize societal benefits, while private firms prioritize profit maximization. This distinction creates a complex dynamic between the two types of firms, as they compete for market share and influence.

Privatization and Partial-Privatization:
Mixed oligopoly also involves the privatization and partial-privatization of public firms. Privatization refers to the transfer of ownership of a public firm from the government to private individuals or companies. Partial-privatization involves the sale of a portion of a public firm's shares to private investors. The privatization of public firms has been a controversial issue, with some arguing that it can lead to increased efficiency and innovation, while others argue that it can lead to reduced public control and increased inequality.

Applications:
Mixed oligopoly has numerous applications across various subfields of economics. In the field of industrial organization, mixed oligopoly models are used to study the behavior of firms in industries with mixed ownership and competition. For example, the airline industry is often characterized as a mixed oligopoly, with a few dominant airlines competing with a large number of smaller airlines. In the field of applied microeconomic theory, mixed oligopoly models are used to study the effects of market power and collusion on firm behavior.

Enrichment of the Original Analysis:
One of the key challenges in studying mixed oligopoly is the interaction between providers of public sector services and traditional goods. Traditional goods are typically produced and sold in a competitive market, while public sector services are provided by the government and are often subject to regulation and oversight. The original analysis of mixed oligopoly has been enriched by studying the interaction between these two types of goods and services.

Conclusion:
Mixed oligopoly is a complex and dynamic market structure that involves the interaction of public and private firms with different objectives and strategies. The theoretical analysis of mixed oligopoly has provided valuable insights into the behavior of firms in this market and has applications across various subfields of economics. As the world continues to evolve and new market structures emerge, the study of mixed oligopoly will remain an important area of research and analysis.

ISBN-13: 9781108726245