Increased private firms in mixed oligopolies lead to profit decline.
Mixed oligopolies, which have both private and public enterprises, have seen an increase in private firms entering the market due to deregulation. The number of private firms affects competition and profits, with more firms leading to lower profits for existing private firms. However, the impact on profits can change if the privatization policy is influenced by the number of private firms. The study used a production cost function to show that when privatization is fixed, more private firms mean lower profits. But when privatization is flexible, the relationship between the number of private firms and profits forms a U-shape. This means that in markets with free entry, different levels of privatization can lead to multiple profit equilibria.