Governments and Producers in Multinational Markets: A Mixed Oligopoly

This paper extends the existing mixed oligopoly analysis by studying the case where governments do not have the same attitude toward producers' surplus in a multinational market. It demonstrates that governments' emphasis on profitability might discourage them from joining a coordinated privatization process with other governments. Thus the governments do not always face a prisoners' dilemma in privatizing their national firms as suggested previously. It also demonstrates that private sector increases its production when governments appreciate producers' surplus more than consumers'. JEL Classification: L13, L32