SHERP

The Optimal Government Shareholding Strategy and the Cost Structure

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Authors
Huang, ChinShu; Lee, JenYao; Chen, ShihShen
Issue Date
2006
Publisher
Seoul Journal of Economics
Citation
Seoul Journal of Economics 19 (No. 2 2006): 251-274
Keywords
public firm; mixed oligopoly; Privatization; mixed ownership enterprise
Abstract
This paper analyzes government's optimal shareholding strategy within the framework of the mixed oligopoly. It is found that: (1) When both public and domestic firms have the same cost coefficient, the government's best policy is to adopt the full mixed oligopoly. (2) When the cost coefficient of the public firm is lower than a threshold value, the government should opt for a full mixed-oligopoly policy. However, when the public firm's cost coefficient is higher than the threshold value, the government should privatize the public firm completely and exit the market. The single mixed oligopoly is just an alternative proposal when it fails to transform all of the private firms into mixed ownership enterprises.
ISSN
1225-0279
Language
English
URI
http://hdl.handle.net/10371/1354
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College of Social Sciences (사회과학대학)Institute of Economics Research (경제연구소)Seoul Journal of EconomicsSeoul Journal of Economics vol.19(2) (Summer 2006)
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