We considered in a single international mixed oligopoly market, firms producehorizontal differentiated commodity, and found that the optimal privatization policy ismonotonic in the differentiated degree of commodity characters whether public firmmerger with domestic private firm or not; The degree of privatization ismonotonically increasing with the more number of foreign private firm entry. Eventhough social welfare improving promotes public firm to merge, but private owner’sincentives to merge are influenced by the degree of privatization, the differentiateddegree of commodity and numbers of foreign firm simultaneously.