Международная студенческая научно-практическая конференция «Инновационное развитие государства: проблемы и перспективы глазам молодых ученых». Том 2

Miroshnichenko K.G., Kolomoychenko O.E., Nikolaev T.G.

Oles Honchar Dnipropetrovsk National University, Ukraine


Command economy was introduced in Ukraine before the 90’s of the 20th century; the manufacturing sector was represented by state-owned enterprises. A transition period is a changeover from a planned economy, which is based on the original foundations, and so for it has peculiar features and patterns. Thus, the emergence of the industrial foundations of capitalist society led to intensive processes of production and labor socialization, the growth of private property, the development of such ownership forms, as the stock, the monopoly and the state. This is an objective, natural process. The administrative-command system was based on the absolute dominance of state ownership, and one of the main tasks of the transitional period are deregulation and privatization of state property, that is, instead of the state must establish various forms of ownership (collective, private, cooperative, government, etc.). Consequently, if the formation of the market economy socialization leads to the development of property new forms, which opened the space for a growing scale of production, now is the reverse process – in order to overcome the excessive formal socialization of production and to create a form of property that will meet the real socialization of production and contribute to the development of the productive forces. Therefore the choice of public capital optimal share in companies with state participation is a task relevant to the practical and theoretical sense.

In this paper we investigate the impact of the problem of providing employment to the choice of the optimal state ownership in the capital of companies with state participation, as well as the objective function of government and the national welfare. It was designed and analyzed a model of mixed oligopoly, in which at the first stage the government chooses the state share of ownership in the capital to maximize its objective function. The government in transition economies is not pure body, maximizing national welfare, and takes into account the pressure of the providing employment problem. Therefore, the objective function of government should include a component corresponding to the national welfare, and a component that reflects the degree of importance of the providing employment problem. At the second stage the company with state ownership shares in the commodity market competing with a private company. While the task of a private company is to maximize profits, a company with state participation maximizes a weighted average of its own profits and the objective function of the Government, with a weight equal to the proportion of state ownership in the company with state participation. The constructed model, thus, includes two important features of a transition economy: firstly, the government faces the challenge of providing employment, and secondly, the prevailing market structure may be a mixed oligopoly, in which state-owned companies compete with private companies, emerging in the process of deregulation.

Depending on the criterion of state-owned company efficiency will vary the state's share in the company. The state can solve one of the objectives: to maximize profits, profit at the level of self-sufficiency and the maximization of production, profit maximization in the public and the appropriate level of production, the criterion of providing the required level of employment.

Thus, the constructed model reflects the market situation in which the balance is shown in the commodity market companies with state participation, and companies with private capital. This model is solved by finding the Cournot equilibrium. Analysis of the resulting solutions can nominate the following statement:

Increasing the share of state ownership in private-public companies in oligopolistic Cournot competition leads to an increase in the equilibrium volume of output in this company, and a decrease in output of a private company. However, the total production will be increased and, consequently, the price of products is reduced. By increasing the weight of the objective function of the state increases parameter in the objective function of the company with state participation. Since the equilibrium volume of output in the company with state participation above the level corresponding to pure profit maximization, an increase of the parameter allows a company with state participation to get a larger volume of output. Since the production volume of state-owned and private companies is strategic substitutes, it leads to a reduction in output in a private company. The decline in output by a private company will be less than the increase in output by a private company, which consequently leads to an increase in total output. The growth of total output in the presence of state-owned companies (and thus reducing the market price of the product), is a contributing factor to increased competition. This effect corrects the distortion associated with oligopolistic competition, which is low (in terms of national wealth), the volume of output, and is an important stimulus to the preservation of the industry enterprises with state participation.

Consequently, the presence of state ownership shares in private companies affect competition in the markets, which in turn affects the price, the profitability of firms and profitability for the state enterprises of mixed ownership.