| Abstract : | This dissertation reviews, from a theoretical point of view, the efficiency aspect of markets where private firms co-exist with public firms. It consists of five sections. Section I introduces the basic concepts that are going to be used, such as those of mixed oligopoly and public firm, and provides a brief description of the topics that are going to be discussed and the methodology that will be followed. Section II reviews the first generation of papers that have been written on mixed oligopolies. These papers examine whether the presence of a public firm in the industry is efficient, and compare social welfare between a private and a mixed oligopoly under various oligopolistic structures. We also present papers that examine issues such as the entry of new firms in the market, the optimality of establishing a public firm in a private oligopoly, and if private entry should be induced in a market monopolised by the state. Section III presents the more recent literature on the topic of mixed oligopolies. These papers are based on earlier work, but focus on rather more specific issues. In particular, this section begins by reviewing papers that introduce production subsidies in a mixed oligopoly market, and proceeds by reviewing papers that allow for partial privatisation of the public firm. There are also references to papers that focus on more particular topics, such as product differentiation and price competition. In Section IV we attempt to develop a model of mixed duopoly with two segmented markets, the ‘main’ market and a ‘problematic’ one. Having in mind cases in Greece, we assume not only that the demand in the ‘problematic’ market is lower, but also that the production costs are higher relatively to those in the ‘main’ market. In fact, it is assumed that it would be unprofitable for a firm to operate in this market. However, for political, social or other reasons, this market has to be served (universal service), and at price no higher than that of the main market. The case where one of the firms is controlled by the state is examined first, and then it is compared to the subsidised private oligopoly. Section V summarises the main results of the literature reviewed above, and draws some conclusions concerning the function of the mixed markets.
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