Free entry in mixed oligopoly leads to insufficient privatization?

Abstract

This paper investigates privatization policy in mixed oligopoly when partial privatization changes a technological difference between semi‐public and private firms. It shows that when the degree of privatization is partial, privatization is insufficient. Furthermore, privatization is more likely to be insufficient as the market becomes more competitive. If the cost efficiency gain is captured by decreasing the degree of privatization, privatization is insufficient regardless of whether entry by private firms is restricted or free.