TY - JOUR

T1 - Mixed oligopoly and spatial price discrimination with foreign firms

AU - Heywood, John

AU - Ye, Guangliang

PY - 2009/9

Y1 - 2009/9

N2 - This paper is the first to examine the welfare consequences of foreign competition in a mixed oligopoly set in a linear model of spatial price discrimination. It demonstrates that the entry of a foreign firm often lowers domestic welfare. This results because the public firm locates largely independently of the presence of the foreign firm and because the profit earned by the foreign firm reduces domestic welfare. Privatization of the public firm typically lowers domestic welfare but can increase global welfare. Thus, domestic governments are unlikely to allow foreign entry and when they do, they are unlikely to privatize the public firm despite the potential rise in global welfare.

AB - This paper is the first to examine the welfare consequences of foreign competition in a mixed oligopoly set in a linear model of spatial price discrimination. It demonstrates that the entry of a foreign firm often lowers domestic welfare. This results because the public firm locates largely independently of the presence of the foreign firm and because the profit earned by the foreign firm reduces domestic welfare. Privatization of the public firm typically lowers domestic welfare but can increase global welfare. Thus, domestic governments are unlikely to allow foreign entry and when they do, they are unlikely to privatize the public firm despite the potential rise in global welfare.

KW - Mixed oligopoly

KW - Public enterprise

KW - Spatial price discrimination

U2 - 10.1016/j.regsciurbeco.2009.03.004

DO - 10.1016/j.regsciurbeco.2009.03.004

M3 - Journal article

VL - 39

SP - 592

EP - 601

JO - Regional Science and Urban Economics

JF - Regional Science and Urban Economics

SN - 0166-0462

IS - 5

ER -