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Optimal Trade, Industrial, and Privatization Policies in a
Mixed Duopoly with Strategic Managerial Incentives

22 Pages Posted: 9 Jan 2011  

Winston W. Chang

State University of New York at Buffalo - Department of Economics

Date Written: March 1, 2007

Abstract

This paper examines strategic managerial incentive and optimal privatization policy in a mixed duopoly model with a more efficient foreign private firm competing in the domestic market. It is shown that the home firm's incentive towards sales away from profit is higher and the foreign firm's is lower if the home firm's public ownership share is increased, its cost is lowered, or the foreign firm's cost is increased. Welfare in the pure public case is larger than in the pure private case, but a partial public ownership is optimal. The incentive schemes reduce welfare and the government's optimal ownership share compared with the case without such schemes.

Suggested Citation

Chang, Winston W., Optimal Trade, Industrial, and Privatization Policies in a Mixed Duopoly with Strategic Managerial Incentives (March 1, 2007). Journal of International Trade and Economic Development, Vol. 16, No. 1, pp. 31-52, 2007. Available at SSRN: https://ssrn.com/abstract=1736738

Winston W. Chang (Contact Author)

State University of New York at Buffalo - Department of Economics ( email )

453 Fronczak Hall
Department of Economics, SUNY at Buffalo
Buffalo, NY 14260
United States
716-645-8671 (Phone)
716-645-2127 (Fax)

HOME PAGE: http://economics.buffalo.edu/facultyprofiles/winston-chang/

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