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Privatization and Efficiency in a Differentiated Industry

Anderson, Simon P.
Thisse, Jacques-François
Year 1995
Collection Cahiers de recherche; 1995.01
Abstract We consider a market in which a public firm competes against privates ones, and ask what happens when the public firm is privatized. In the short run, privatization is harmful because all prices rise : the disciplinary role of the public firm is lost. In the long run, privatization leads to further entry ; the net effect is beneficial if consumer preference for variety is not too weak. A sufficient statistic for welfare to be higher in the long run is that the public firm makes a loss. Profitable firms should not be privatized, in contrast with frequent practice. logistique
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ANDERSON, Simon P., DE PALMA, André, THISSE, Jacques-François. Privatization and Efficiency in a Differentiated Industry. 1995 https://archive-ouverte.unige.ch/unige:5993

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Deposited on : 2010-04-15

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