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Advisor(s)
Abstract(s)
In this paper, we study the relationship between the privatization of a state-controlled firm and
government preferences for tax revenue, by using a differentiated mixed Cournot triopoly. We assume that the government fixes a tax rate on the production. The state-controlled firm aims to maximize the sum of consumer and producer surplus; the government’s objective function is a weighted sum between social welfare and tax revenue.
The results show that the degree of the differentiation of the goods has impact on the privatization decisions. We also compare our results with the ones in duopoly model for the case of homogenous goods.