Original scientific paper
https://doi.org/10.1080/1331677X.2022.2048188
Privatisation policy with different oligopolistic competition in the public utilities market
Junlong Chen
Xinran Xie
Jiali Liu
Chuiqing Rong
Abstract
This study constructs an oligopoly model in public utilities sector
to explore the optimal privatisation policy and the factors affecting
equilibrium outcomes and explores the optimal proportion of
state-owned shares. We also offer empirical evidence of China’s
public utilities from 1985 to 2019 to prove the applicability of
model results. The results show that, depending on product differentiation,
cost variance, technical level, nationalisation, partial
or full privatisation can be optimal. Improving capital efficiency
increases social welfare in Model PP, but not in Model PS.
Product differentiation improves social welfare at the expense of
profits in SS model. In Model PM, technical improvements boost
private enterprise profits but induce a decrement in social welfare.
A high proportion of state-owned shares fail to improve
social welfare in Model SM. In a word, the value range of parameters
and competition modes in public utilities sector affect market
players’ welfare distribution, which identifies with the empirical
analysis of China’s public utilities development.
Keywords
Public utilities; privatisation; capital efficiency; the optimal proportion of state-owned shares
Hrčak ID:
302967
URI
Publication date:
31.3.2023.
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