Privatisation and market structure : a game theoretic approach

This thesis focuses on the impacts of privatisation on the relevant industrial structure of the economy. Standard tools of industrial organisation theory are applied to examine these impacts and, thereby, shed light on relevant welfare issues. The focus of this thesis is to examine the ramifications of privatisation in imperfectly competitive markets. Simple Cournot-Nash types of games have been developed, where the market is a duopoly containing a privatised firm with the other firm being a new entrant. These games examine the efficacy and impacts of privatisation, and the role of government in this duopoly. The thesis endrogenously derives multiple equilibria in the duopolistic market; examines decontrolling/deregulating a vertical market; looks at the potential competition in vertical markets and examines potential collusion among existing firms to forestall entry; and addresses issues of privatisation in successive duopolies with cooperative investments. Results show that whether privatisation is beneficial to the community will rely on the astute role of government intervention.