Transcript 第10講報告スライド - Institute of Social Science, University of

Presence of Foreign Investors
in Privatized Firms and
Privatization Policy
Joint work with Ming Hsin Lin
Oligopoly Theory
1
Plan of the presentation
(1) Rough sketch of the model and results
(2) Overview of related works
(3) Motivation
(4) Formal explanation of our model
(5) Results and implications
Oligopoly Theory
2
Rough sketch of the model
one public firm (firm 0), m private firms, Cournot
mγ foreign private firms, m(1-γ) domestic private
firms (m, γ exogenous)
α: the degree of privatization (endogenous)
β: the degree of foreign presence of partially
privatized firm (exogenous)
Our main concerns: Relationship between optimal
α (α*) and β.
Oligopoly Theory
3
Time Structure
(1) government chooses α.
(2) (measure zero) investors purchase the stocks
of firm 0
(3) Firms face Cournot competition
Oligopoly Theory
4
Results
(1) α * is increasing in β .
→The optimal degree of privatization is increasing in
the foreign presence in the privatized firms.
(2) α * is decreasing in γ.
→The optimal degree of privatization is decreasing in
the foreign presence of the product markets.
(3) α * is non-monotone in β if β =γ.
(4) α * is increasing in m.
Oligopoly Theory
5
Result 1
α*
0
Oligopoly Theory
β
6
Result 2
α*
0
γ
Oligopoly Theory
7
Result 3
α*
0
Oligopoly Theory
β =γ
8
Result 4
α*
0
Oligopoly Theory
m
9
Mixed Oligopoly, Mixed Market
State-owned public firms compete against private
firms
Oligopoly Theory
10
Examples of mixed oligopoly in
Japan
Banking: Postal Bank, DBJ, Iwate Bank
Housing Loan: the Public House Loan Corporation
Private Funds: DBJ, Industrial Revitalization
Corporation of Japan
Life Insurance: Postal Life Insurance (Kampo)
Overnight Delivery: Japan Post
Energy: Public Gas Corps (Narashino, Fukui,...)
Broadcasting: NHK
Oligopoly Theory
11
Examples of mixed oligopoly in
other countries
Banking: Postal Banks (New Zealand, U.K.,
Germany,...)
Automobiles: Renault, VW
Medicine: Public Institute in Brazil
National Defense, Aviation: EADS, Airbus
Airline: National airlines (Swiss, Belgian, France,...)
Overnight Delivery: USSP
Energy: Electricite de France, Gas de France
Broadcasting: BBC
Oligopoly Theory
12
De Fraja and Delbono(1989)
(1) Cournot-type (quantity-setting competition,
simultaneous-move, no product differentiation)
(2) No cost difference between public and private
firms.
(3) Linear demand and quadratic cost function.
(4) The private firm maximizes its own profits given
outputs of other firms.
(5) The public firm maximizes social welfare
given outputs of other firms.
→The public firm chooses its output level so that the
price equals to its marginal cost.
Oligopoly Theory
13
Results
Compare the pure economy (after the
privatization) to the mixed economy (before the
privatization)
→Privatization of the public firm might improve
welfare
WP >WM or WP<WM.
Oligopoly Theory
14
Intuition
(1) Privatization of the public firm reduces public
firm's output q0
(2) Privatization increases private firm's output
q1
→production substitution from the public firm to
the private firm.
(3) Privatization decreases total output q0 +q1
Effects (1) and (3) reduces welfare and effect
(2) improves welfare. Effect (2) may be the
strongest, leading to an improvement of welfare.
Oligopoly Theory
15
Production substitution
reaction curve
before privatization
q1
reaction curve of
the private firm
reaction curve
after privatization
0
Oligopoly Theory
q0
16
More detailed explanation of intuition
Privatization of the public firm reduces q0 and
increases q1 (production substitution).
Before Privatization p=c0' >c1'
→Public firm's marginal cost is higher than private
firm's
→ Production substitution from public to private
economizes production costs →Welfare-improving
→Privatization reduces total production level and
so consumer surplus → Welfare-reducing
It is possible that the former effect dominates the
latter effect.
Oligopoly Theory
17
Contribution of De Fraja and Delbono(1989)
(1) No cost difference between public and private
firms → privatization does not improve production
efficiency
(2) Public firm's objection: welfare →No agency
problem in the public firm
(3) No additional policies by regulation, tax, or
subsidy after privatization.
⇒Ideal circumstances for the existence of public firm.
Against assumptions for the advocators of
privatizations. → Nevertheless, privatization might
improve welfare
Oligopoly Theory
18
完全民営化と完全国有化のみが選
択肢か
公企業とされる企業の中にはPublic Sectorが１０
０％保有しているケースばかりではない。
Iwate Bank, Hokuriku Electric Power Company, VW,
Renault,
持ち株比率自身をcommitment deviceとして使えない
か？
Oligopoly Theory
19
Matsumura (1998)
(1) Cournot-type (quantity-setting competition,
simultaneous-move, no product differentiation)
(2) No restrictions on the cost differences between
public and private firms.
(3) The objective function of the public firm is the
weight sum of social welfare and its own profits.
（Partial Privatization)
U0= α W+ (1-α) π0
(4) General demand and general costs.
The government chooses s and s affects α. After
observing α firms compete in the product market.
Oligopoly Theory
20
持株比率と公企業の目的関数
α
０
０.５
Oligopoly Theory
持株比率s
21
Results
α =1 is optimal only if it yields public monopoly.
→If we allow partial privatization, no privatization
(full nationalization) never becomes optimal.
Oligopoly Theory
22
Intuition
(1) Reducing α reduces public firm's output q0 .
Since p=c0', this effect is negligible (second order)
←envelope theorem
(2) Reducing α increases private firm's output q1
Since p=c1', this effect is negligible (first order)
⇒(2) dominates (1).
Oligopoly Theory
23
持株比率と公企業の目的関数 （そ
の後の研究）
α
０
持株比率
Oligopoly Theory
24
Partial Privatization
Free Entry: Matsumura and Kanda (2005)
Product Differentiation: Fujiwara (2007)
Spatial Model: Lu and Poddar (2007)
Environmental Policy: Kato (2006), Ohori (2006)
Anti-Trust: Barcena-Ruiz and Garzon (2003)
Labour Market: Beladi and Chao (2006)
Subsidization: Tomaru (2006)
Oligopoly Theory
25
Foreign Competitors
公企業がdomestic welfareを最大化する
→私企業が国内企業か外国企業かによって公企業の行
動が変わる
相手が外国企業だと一般によりaggressiveな行動を取
る
Fjell and Pal (1996): De Fraja and Delbono (1989)の外
国企業バージョン
Pal and White (1998): その戦略的貿易政策バージョン
Chang (2005), Chao and Yu (2006), Fujiwara (2006):
そのpartial privatization version
Oligopoly Theory
26
Foreign Competitors
公企業はfollowerになった方がよい。(Pal,1998)
→私企業が外国企業になると公企業はleaderになった
方がよい(Matsumura 2003)
Matsushima and Matsumura (2003): 私企業は公企業か
ら出来るだけ離れて立地。そこで集積。
→外国企業が２社以上になると均衡パターンが変わる
(Matsushima and Matsumura 2006)
Oligopoly Theory
27
Existing Works
Partial Privatization: Public Sector, Private Sectorとも
に株主
どういう訳か、既存研究ではDomestic Private Sector
だけが部分民営化された企業の株主と仮定。
一方民間企業に関しては株主が外国人であるケースに
ついては議論している。
何で非対称？
この問題を考える。
Oligopoly Theory
28
Privatization and Foreign
Investors
多くの途上国・移行国の民営化では外国資本が大きな
役割
エジプト：銀行民営化
トルコ：銀行、タバコ公社民営化
チェコ、ポーランド、ハンガリー
資本が自由化されている先進国でも
VW、ルノー、フランスの多くの銀行、ドイツポスト、
NTT、ＪＲ、ＪＴ、ＪPower
アリタリア航空、フランス電力公社、フランスガス公
社
Oligopoly Theory
29
Notations
m: Number of private firms
γ: ration of foreign private firms
α: the degree of privatization (endogenous)
α*:the equilibrium value of α
β: foreign stock holding in the partially private firm
M: government's revenue from α (endogenous)
qi: Firm i's output, Q: Total output
Ci(xi) =0.5(qi)2 : Firm i's production cost
P(X)=a-Q: demand function
πi: Firm i's profit, CS: Consumer surplus, W: social
surplus, Superscript S: Equilibrium value at the
second stage game
Oligopoly Theory
30
The Model
Players: government, firm 0 (public firm), mγ
foreign private firms, m(1-γ) domestic private firms,
Payoff: domestic welfare (government), Its own
profits (private firms)
α(its own profit)＋(1-α) domestic welfare (firm 0)
(1) Government sells α at the price α at the price
M= α π0e
(2) Given α and M, firms faces Cournot competition.
Oligopoly Theory
31
Second Stage
Firm 0's payoff
απ0 +(1-α) domestic welfare
=απ0+(1-α)(CS+(1-αβ)π0+m(1-γ)π1+βM)
q0S is decreasing in α and increasing in βand γ
Privatization makes firm 0 less aggressive.
An increase in the foreign presence makes firm 0
more aggressive.
Oligopoly Theory
32
First stage
The government's payoff
domestic welfare
=CS+(1-αβ)π0+m(1-γ)π1+βM
=CS+π0+m(1-γ)π1
Important Point: In the second stage, M is given
exogenous, whereas in the first stage M depends
on α, so it is endogenous.
Oligopoly Theory
33
Proposition 1
(i)α* is increasing inβand (ii)α* is decreasing in γ.
(i) An increase in foreign presence in the capital
market for privatization increases the optimal
degree of privatization
Complementarity between privatization policy and
open market policy
(ii) An increase in foreign presence in product
markets decreases the optimal degree of
privatization
Substitute between privatization policy and open
market policy
Oligopoly Theory
34
Intuition (ii)
A decrease of α accelerates the competition,
resulting in a lower price and lower outputs of
foreign firms.
→It reduces the rent obtained by the foreign firms.
The government has a stronger incentive to commit
to larger output when γ is large.
Exactly the same mechanism repeatedly appear in
the world of strategic trade policy.
Oligopoly Theory
35
Intuition (i)
A decrease of α accelerates the competition,
resulting in a lower price and lower profits of firm 0.
This effect becomes stronger when βis larger.
→It reduces M.
The government has a stronger incentive to commit
to smaller output (larger output) when β is large.
Time-inconsistency.
The government does not want to take aggressive
behavior before selling the stocks.
After selling the stocks, it has incentive to expand
the outputs of firm 0.
Committing to a smaller output by increasing in α
Oligopoly Theory
36
Further Results
What happens if β=γ.
α* is decreasing inβwhen β is small and is
increasing when β is large.
Degree of Privatization is high both in very colsed
economy and very open economy.
Oligopoly Theory
37
Further Results
What happens if β=γ.
α* is decreasing in β and γ.
Oligopoly Theory
38
Summary
(1) An increase in the foreign presence in capital
market increases the optimal degree of privatization..
(2) An increases in the foreign presence in the product
markets decreases the optimal degree of
privatization.
(3) The first result is quite robust (either strategic
substitutes or complements, free entry or not).
Oligopoly Theory
39