Mixed oligopoly model for enterprise privatization without subsidies

Abstract

In this paper, a two-stage game with complete information is used to analyse enterprise privatization. In the first stage, the government will release some shares of state-owned enterprises to maximize social welfare. For the given privatization proportion, all the enterprises will pursue their optimal outputs in the second stage. Then, inverse inference is applied to seek the perfect equilibrium of the sub-game from the second stage to the first one. Finally, the optimal proportion of released shares of state-owned enterprises and social welfare is obtained by maximizing the social welfare of the mixed enterprise in the second stage.

Keywords:

• mixed oligopoly model
• privatization
• social welfare