Yardstick competition, privatization and company restructuring

Yardstick competition, privatization and company restructuring

Blog Article

One of the important devices to smooth the information asymmetry problem of the flex 4 heartworm test regulator is using "yardstick competition" The use of this mechanism has implications on the optimal division of a state-owned company before its privatization.We extend the framework introduced by Armstrong, Cowan and Vickers (1994) from 2 companies to n.The authors show that welfare increases when separating the company in two areas with two different owners compared to a monopoly.We extend this result and show that the combination of the regulators information gains and a socksmith santa cruz decrease on uncertainty when a constant covariance of costs across areas is positive, results in gains from separating horizontally the companies before privatization.The introduction of scale economies turn the results ambiguous.