二地域混合寡占モデルにおける民営化と市場退出  [in Japanese] Privatization and Market Exit in a Two-Region Mixed Oligopoly Model  [in Japanese]

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Abstract

Public firms have shown trends toward privatization since the 1980s. Many privatized firms often exit the market in rural areas because of low profitability. Nevertheless, no theoretical studies on privatization have paid attention to problems caused by the exit of privatized firms. Therefore, in view of exit problems, this paper investigates the effects of privatization on consumer surplus, producer surplus and social welfare in a two region model with different scales of markets.<br>We assume that a public firm and private firms supply goods under a Cournot-Nash competition in region A with a large-scale of market and the public firm monopolistically supplies goods in region B with a small-scale of market. Under this setting, this paper considers the possibility for exit from the smaller market after privatization of the public firm. Therefore, we consider three cases: (i) "a mixed-oligopoly and monopoly" where the public firm is not privatized, (ii) "privatization and monopoly" that chooses privatization and continues to supply goods to both regions, and (iii) "privatization and exit" that chooses privatization and exits from the smaller market. We examine the effects of privatization by comparing the above three equilibria.<br>The results obtained are as follows. First, consumer surplus is the largest in "a mixed-oligopoly and monopoly" case. Second, from the viewpoint of producer surplus, privatization is always preferable and does not depend on whether a privatized firm exits. Third, the effects of privatization on social welfare depend not only on the scales of the markets of the two regions but also on whether the level of the fixed costs is large. That is, if the market size in region B is sufficiently small or the fixed costs are sufficiently expensive, privatization is desirable from the viewpoint of social welfare. This result implies that the public firm should be privatized under conditions of underpopulation in rural areas or for industries with heavy fixed costs.<br><br>JEL Classification: H1, H20, L33

Journal

  • Studies in Regional Science

    Studies in Regional Science 42(3), 581-592, 2012

    JAPAN SECTION OF THE REGIONAL SCIENCE ASSOCIATION INTERNATIONAL

Codes

  • NII Article ID (NAID)
    130003366358
  • NII NACSIS-CAT ID (NCID)
    AN00140630
  • Text Lang
    JPN
  • ISSN
    0287-6256
  • NDL Article ID
    024296341
  • NDL Call No.
    Z3-1124
  • Data Source
    NDL  J-STAGE 
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