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The B.E. Journal of Theoretical Economics

Editor-in-Chief: Schipper, Burkhard

Ed. by Fong, Yuk-fai / Peeters, Ronald / Puzzello , Daniela / Rivas, Javier / Wenzelburger, Jan

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Privatization Neutrality Theorem in Free Entry Markets

Toshihiro Matsumura / Yasunori Okumura
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  • Department of Logistics and Information Engineering, Tokyo University of Marine Science and Technology, Tokyo 135-8533, Japan
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Published Online: 2017-05-26 | DOI: https://doi.org/10.1515/bejte-2015-0130


It is known that if the number of entering firms is endogenous (free entry markets), privatization is not necessarily welfare neutral in mixed oligopolies under a uniform production subsidy policy. We revisit this problem by considering another policy tool, the output floor regulation. We investigate three free entry models with different time structures, a Cournot and two Stackelberg models. We find that neutrality is restored in free entry markets under the optimal output floor regulation, regardless of the time structure.

Keywords: endogenous market structure; minimum quantity regulation; mixed oligopolies; Stackelberg; Cournot; irrelevance results

JEL Classification: H42; L13


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About the article

Published Online: 2017-05-26

This work was supported by JSPS KAKENHI (15k03347 and 16K03612).

Citation Information: The B.E. Journal of Theoretical Economics, Volume 17, Issue 2, 20150130, ISSN (Online) 1935-1704, ISSN (Print) 2194-6124, DOI: https://doi.org/10.1515/bejte-2015-0130.

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