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PRIVATIZATION POLICY AND COST-REDUCING INVESTMENT BY THE PRIVATE SECTOR*

Susumu Cato

Open publisher page 9 citations

Abstract

The purpose of this paper is to investigate how privatization affects the cost-reducing investment by the private sector. We compare the private sector's investment levels between mixed oligopoly and pure oligopoly. We show that privatization increases the cost-reducing investment when the market demand is sufficiently large, while it reduces the cost-reducing investment when the market demand is sufficiently small. Our results imply that the impact of privatization on the private sector's technological efficiency strongly depends on the market environment. Moreover, we examine several extensions.

About this research paper

What this paper is about

The purpose of this paper is to investigate how privatization affects the cost-reducing investment by the private sector. We compare the private sector's investment levels between mixed oligopoly and pure oligopoly. We show that privatization increases the cost-reducing investment when the market demand is sufficiently large, while it reduces the cost-reducing investment when the market demand is sufficiently small. Our results imply that the impact of privatization on the private sector's technological efficiency strongly depends on the market environment. Moreover, we examine several extensions.

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OpenAlex reports 9 citations for this work. Citation counts describe recorded attention and do not establish research quality.

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Available abstract

The purpose of this paper is to investigate how privatization affects the cost-reducing investment by the private sector. We compare the private sector's investment levels between mixed oligopoly and pure oligopoly. We show that privatization increases the cost-reducing investment when the market demand is sufficiently large, while it reduces the cost-reducing investment when the market demand is sufficiently small. Our results imply that the impact of privatization on the private sector's technological efficiency strongly depends on the market environment. Moreover, we examine several extensions.

Key concepts: Oligopoly, Investment (military), Private sector, Economics, Microeconomics, Industrial organization, Market economy, Monetary economics

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