Picture of athlete cycling

Open Access research with a real impact on health...

The Strathprints institutional repository is a digital archive of University of Strathclyde's Open Access research outputs. Strathprints provides access to thousands of Open Access research papers by Strathclyde researchers, including by researchers from the Physical Activity for Health Group based within the School of Psychological Sciences & Health. Research here seeks to better understand how and why physical activity improves health, gain a better understanding of the amount, intensity, and type of physical activity needed for health benefits, and evaluate the effect of interventions to promote physical activity.

Explore open research content by Physical Activity for Health...

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

Capuano, Carlo and De Feo, Giuseppe (2010) Privatization in oligopoly : the impact of the shadow cost of public funds. Rivista Italiana degli Economisti, 15 (2). pp. 175-208. ISSN 1593-8662

[img] PDF
capuano_defeoRIE2010_FINAL.pdf - Accepted Author Manuscript
License: Unspecified

Download (1MB)

Abstract

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.