Privatization in oligopoly : the impact of the shadow cost of public funds

The aim of this paper is to investigate the welfare eect of privatization in oligopoly when the government takes into account the distortionary eect of rising funds by taxation (shadow cost of public funds). We analyze the impact of the change in ownership not only on the objective function of the rms, but also on the timing of competition by endogenizing the determination of simultaneous (Nash-Cournot) versus sequential (Stackelberg) games. We show that, absent effciency gains, privatization never increases welfare. Moreover, even when large effciency gains are realized, an ineffcient public rm may be preferred

Mixed duopoly, privatization and the shadow costs of public funds

The purpose of this article is to investigate how the introduction of the shadow cost of public funds in the utilitarian measure of the economywide welfare affects the behavior of a welfare maximizer public firm in a mixed duopoly. We prove that when firms play simultaneously, the mixed-Nash equilibrium can dominate any Cournot equilibria implemented after a privatization, with or without efficiency gains. This can be true both in terms of welfare and of public firm's profit. When we consider endogenous timing, we show that either mixed- Nash, private leadership or both Stackelberg equilibria can result as subgameperfect Nash equilibria (SPNE). As a consequence, the sustainability of sequential equilibria enlarges the subspace of parameters such that the market performance with an inefficient public firm is better than the one implemented after a full-efficient privatization. Absent efficiency gains, privatization always lowers welfare

Privatization in oligopoly : the impact of the shadow cost of public funds

The aim of this paper is to investigate the welfare effect of privatization in oligopoly when the government takes into account the distortionary effect of raising funds by taxation (shadow cost of public funds). We analyze the impact of the change in ownership not only on the objective function of the firms, but also on the timing of competition by endogenizing the determination of simultaneous (Nash-Cournot) versus sequential (Stackelberg) games. We show that, absent efficiency gains, privatization never increases welfare. Moreover, even when large efficiency gains are realized, an inefficient public firm may be preferred

Mixed duopoly, privatization and the shadow costs of public funds : exogenous and endogenous timing

The purpose of this article is to investigate how the introduction of the shadow cost of public funds in the utilitarian measure of the economy wide welfare affects the behavior of a welfare maximizer public firm in amixed duopoly. We prove that when firms play simultaneously, the mixed-Nash equilibrium can dominate any Cournot equilibria implemented after a privatization, with or without efficiency gains. This can be true both interms of welfare and of public firm's profit. When we consider endogenous timing, we show that either mixed-Nash, private leadership or both Stackelberg equilibria can result as subgameperfect Nash equilibria (SPNE). As a consequence, the sustainability of sequential equilibria enlarges the subspace of parameters such that themarket performance with an inefficient public firm is better than the one implemented after a full-efficient privatization. Absent efficiency gains, privatization always lowers welfare

Mixed duopoly, privatization and the shadow cost of public funds

The purpose of this paper is to investigate the effect of privatization in a mixed duopoly, where a private firm complete in quantities with a welfare-maximizing public firm. We consider two inefficiencies of the public sector : a possible cost inefficiency and an allocative inefficiency due to the distortionary effect of taxation (shadow cost of public funds). Furthermore, we analyze the effect of privatization on the timing of competition by endogenezing the determiantion of simultaneous (Nash-Cournot) versus sequential (Stackelberg) games using the model developed by Hamilton and Slutsky (1990). The latter is especially relevant for the analysis of privatization, given that results and policy prescription emerged in the literature crucially rely on the type of competition assumed. We show that privatization has generally the effect of shifting from Stackelberg to Cournot equilibrium and that, absent efficiency gains privatization never increases welfare. Moreover, even when large efficiency gains are realized, an inefficient public firm may be preferred.mixed oligopoly, privatization, endogenous timing, distortionary taxes

On Public Inefficiencies in a Mixed Duopoly

The aim of this paper is to investigate the welfare effect of a change in the public firm's objective function in oligopoly when the government takes into account the distortionary effect of rising funds by taxation (shadow cost of public funds). We analyze the impact of a shift from welfare- to profit-maximizing behaviour of the public firm on the timing of competition by endogenizing the determination of simultaneous (Nash-Cournot) versus sequential (Stackelberg) games using the game with observable delay proposed by Hamilton and Slutsky (1990). Differently from previous work that assumed the timing of competition, we show that, absent efficiency gains, instructing the public firm to play as a private one never increases welfare. Moreover, even when large efficiency gains result from the shift in public firm's objective, an inefficient public firm that maximizes welfare may be preferred.Mixed oligopoly; Nash equilibria; Endogenous Timing; Distortionary taxes

Mixed duopoly, privatization and the shadow cost of public funds

The purpose of this paper is to investigate the effect of privatization in a mixed duopoly, where a private firm competes in quantities with a welfare-maximizing public firm. We consider two inefficiencies of the public sector: a possible cost inefficiency, and an allocative inefficiency due to the distortionary effect of taxation (shadow cost of public funds). Furthermore, we analyze the effect of privatization on the timing of competition by endogenizing the determination of simultaneous (Nash-Cournot) versus sequential (Stackelberg) games using the model developed by Hamilton and Slutsky (1990). The latter is especially relevant for the analysis of privatization, given that results and policy prescription emerged in the literature crucially rely on the type of competition assumed. We show that privatization has generally the effect of shifting from Stackelberg to Cournot equilibrium and that, absent efficiency gains privatization never increases welfare. Moreover, even when large efficiency gains are realized, an inefficient public firm may be preferred.mixed oligopoly, privatization, endogenous timing, distortionary taxes.

Upward-sloping labor supply, firing costs and collusion

We analyze the sustainability of collusion in a supergames framework wherein the only input is a highly qualified type of labor, with its supply being upward-sloping and the wage being sensitive to the industry input demand. Hence, when seeking to expand production, firms have to attract additional employees by offering them higher wages. We compare equilibria and social welfare in both quantity and price competitions, as well as by considering non-negligible firing costs. We prove that: the sensitivity of wages to the industry demand for labor facilitates collusion in price competition (in quantity competition, the reverse is true); in both price and quantity competitions, collusion should be welfareenhancing when the sensitivity of wage is high enough. Moreover, the introduction of firing costs, decreasing the incentive to cut the production after a temporary rise, reduces the deviation profits making collusion easier to sustain. Our results can be extended to any context where input prices are endogenous

Prospettive del regionalismo economico

Nel secondo dopoguerra l’antitesi tra multilateralismo e regionalismo è venuta cadendo. I regionalismi possono adesso rappresentare una esemplificazione di accordi economicamente positivi tra amministrazione centrale e amministrazioni periferiche. Gli accordi possono essere collaudati più facilmente, e di conseguenza le grandi manovre monetarie che si fanno ogni giorno “sulla testa degli stati”, ma soprattutto nel disinteresse delle popolazioni sottosviluppate, dovranno cedere il posto a transazioni “per” il profitto e non contro il profitto di qualcuno. Di fronte allo sviluppo dell’economia globale non poteva che verificarsi, e trovare pratiche conferme, la tendenza alla fusione bancaria per far fronte alle esigenze del neocapitalismo e in particolare del moltiplicarsi di Banche di Affari. Tuttavia sono proprio le linee evolutive dell’alta finanza a destare l’attenzione di chi teoricamente studia cause ed effetti della globalizzazione. Uno degli aspetti ricorrenti della finanza, specialmente da quando il teatro mondiale degli scambi ha dovuto fare sempre più i conti con il terrorismo, è che le decisioni cruciali vengono prese –sempre più spesso senza adeguati approfondimenti- da parte di un numero molto ristretto di decisori, i quali operano in scacchieri politicamente differenti, e tuttavia sembrano comportarsi come se queste diversità, in altri tempi reputate essenziali, non si vogliano oggi evidenziare per non compromettere intese “sempre possibili”. Si deve riconoscere che nel corso degli ultimi quindici anni anche i paesi socialisti abbiano preferito imboccare la via dello sviluppo multilaterale, senza avanzare questioni di principio. Ciò ha anticipato gli effetti, soprattutto quelli negativi, della globalizzazione dal momento che gli stati, mediante la loro azione all’interno del sistema internazionale, effettuano opzioni di fondo che costituiscono la base la successivi rapporti politico-militari. Salvo eccezioni, gli stati di maggior peso dei cinque continenti adeguano tali opzioni basilari alle scelte di macroeconomia, prima ancora di rivolgere l’attenzione ai classici problemi del debito pubblico, delle spese improduttive o della sperequazione fra i redditi delle differenti fasce della popolazione. Il comportamento regionalista presenta due differenti facce. La prima è consistita, soprattutto nel primo dopoguerra, nel favorire accordi tra stati aventi mercati affini, quindi desiderosi di sostenersi reciprocamente e nel contempo di effettuare una più marcata concorrenza ad altri attrattori del mercato internazionale