Negative Eternality, Market Structure and“Private Enterprises Replaced by SOE”
ZHANG Hui1, ZHAO Feng2
(1．Peninsula Institute of Economics, Shandong Institute of Business and Technology, Yantai 264005, China;2. Tianshui Branch, People’s Bank of China, Tianshui 741000, China)
Abstract The paper builds a game model amaong negative externality of production and market structure, the government, state enterprises and private enterprises.It is found that a partial privatization of SOE is the best strategy. But it is not the best choice to completely nationalize private enterprises. As the negative externality is not neglected, overprivatization will necessarily lead to replacement of private enterprises by SOE. It is a fine-tuning of the economic structure, not substitution of market role for resources allocation.
2012, Vol. 1 
