Yoshihiro Tomaru

Mixed Duopoly, Privatization, and Subsidization with Excess Burden of Taxation

We investigate optimal tax‐subsidy policies in mixed and private oligopolies with excess burden of taxation. We compare the optimal subsidies and the resulting welfare levels among four regimes: mixed and private Cournot duopolies and Stackelberg competition with public and private leaderships. We show that, in contrast to the existing works on the privatization neutrality theorem, privatization affects resulting welfare. Duopole mixte, privatisation et subsidisation en presence de fardeau fiscal excedentaire. On examine les politiques optimales de taxes et de subventions dans le cas doligopoles mixtes et prives en presence de fardeau fiscal excedentaire. On compare les subsides optimaux et les effets sur le niveau de bien‐etre dans quatre regimes : les duopoles de Cournot (mixte et prive) et la concurrence a la Stackelberg avec leadership public et prive. On montre que contrairement a ce que suggeraient les travaux anterieurs sur le theoreme de la neutralite de la privatisation, la privatisation affecte les niveaux de bien‐etre.

Mixed Duopoly, Privatization and Subsidization in an Endogenous Timing Framework

This is the first paper to consider the endogenous timing in mixed duopoly with subsidization. Pal (Economics Letters, Vol. 61 (1998), pp. 181–185) shows that private leadership is always an equilibrium outcome in a mixed duopoly without any subsidy. By including the production subsidy, we observe that private leadership may disappear from equilibrium and that Cournot and public leadership become the likely equilibrium outcomes. Furthermore, we find that when firms have identical technologies the first-best allocation can be attained by the same subsidy before and after privatization even though firms production timings are endogenized. Finally, we examine privatization with lobbying activities and show that such privatization leads to the deterioration of social welfare.

Market Structure and Privatization Policy Under International Competition

We investigate the relations among market structure, privatization, and tax‐subsidy policies. We find that if there is no foreign competitor, privatization does not matter under the optimal tax‐subsidy policy regardless of the number of firms. However, this is not true if there are foreign competitors; further, privatization is more likely to improve welfare when the number of firms is larger even under the optimal tax‐subsidy policy. We also investigate two Stackelberg models: public leadership and private leadership. We find that private leadership yields a larger (smaller) total social surplus than public leadership when the presence of foreign firms among the private firms is small (large).

Endogenous Timing in Mixed Duopoly with Increasing Marginal Costs

This paper investigates the desirable roles of both public and private firms with increasing marginal costs in mixed duopoly. In contrast to Pal [1998] and Mat- sumura [2003a], who use the constant-marginal-cost model, we show that it is possible for each firm to prefer the role of either the leader or the follower. Furthermore, this paper analyzes the endogenization of the production timing of both types of firms by using the observable-delay game of Hamilton and Slutsky [1990]. We find that even with increasing marginal costs, we can obtain Pals result - the two types of Stackelberg outcomes are in equilibrium.

Strategic Managerial Delegation in a Mixed Duopoly with Capacity Choice: Partial Delegation or Full Delegation

In this paper we analyze the capacity choice in a mixed duopoly, considering the separation between ownership and management of firms. We introduce the following two alternatives as each firms delegation type to its manager: (i) partial delegation - delegating only the quantity setting, and (ii) full delegation - delegating the determination of both capacity and quantity levels. First, we investigate each firms capacity scale relative to its quantity, given its delegation type. Second, we derive the equilibrium delegation type of each firm under the endogenous decision by its owner. Finally, we consider the effect of privatization on each firms delegation type and social welfare.

Mixed duopoly, location choice, and shadow cost of public funds

We examine the relationship between equilibrium and efficient levels of product differentiation in a mixed duopoly, where a welfare-maximizing public enterprise competes with a profit-maximizing private firm. We introduce shadow costs of public funding (i.e., the excess burden of taxation). The profits of public firms obtained by the government reduce these costs. We find that in a mixed duopoly, the level of product differentiation is too low for social welfare. This result is in sharp contrast to the private oligopoly, where the level of product differentiation is too high. Finally, we show that when the shadow cost is high, privatizing the public enterprise improves welfare.

Output and R&D subsidies in a mixed oligopoly

We analyze an oligopoly where public and private firms compete in quantity and R&D. Using general functions, we show that an output subsidy and an R&D tax can achieve the first-best allocation. Moreover, the degree of privatization does not influence the optimal output subsidy but does influence the optimal R&D tax.

Inter‐Regional Mixed Oligopoly with a Vertical Structure of Government

This paper incorporates the vertical structure of governments into a mixed oligopoly model by considering the public firms owned by different government levels, namely, a state‐owned public firm and a local public firm. As in the existing literature, a state‐owned public firm is assumed to maximise the welfare of an entire country comprising two regions. On the other hand, a local public firm is assumed to maximise the welfare of only one region. In such a setting, we find that when the central and local governments independently consider whether to privatise their respective public firms, only the state‐owned public firm should be privatised. Furthermore, we show that for the welfare of a country, a mixed oligopoly with a vertical structure of government can be more desirable than a mixed oligopoly without it.