Basic Properties of a Mixed Oligopoly Model

In this chapter, we discuss previous studies and summarize the properties of a mixed oligopoly. With our overview of a mixed oligopoly model, we attempt to understand the fundamental characteristics of government intervention within an oligopoly. We consider the partial privatization problem in relation to the Stackelberg leader solution. The second-best outcome can be achieved by partial privatization. We also show that full privatization is not optimal if private firms can enter the oligopolistic market. In a free-entry equilibrium, the government can control excessive entry by imposing an entry tax.