Privatization and Foreign Competition

Lars Persson and Pehr-Johan Norbäck

No 545, Working Paper Series from Research Institute of Industrial Economics

Abstract: This paper determines the equilibrium market structure in a mixed international oligopoly, where the state assets are sold at an auction. The model suggests that low greenfield costs and low trade costs induce foreign acquisitions. The intuition is that domestic firms can then not prevent foreign firms from becoming strong competitors and thus, their willingness to pay for the state assets is low. We also find that profit shifting from domestic to foreign firms generated by National Treatments clauses is partly paid for by the foreign investor in the bidding competition over the state assets.

Keywords: Privatization; Failing firms; FDI; Acquisitions; National treatment (search for similar items in EconPapers)
JEL-codes: F23 L13 L33 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2001-09-04, Revised 2001-02-02
New Economics Papers: this item is included in nep-ifn
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Citations: View citations in EconPapers (4)

Published in Journal of International Economics, 2004, pages 409-416.

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Related works:
Journal Article: Privatization and foreign competition (2004)
Working Paper: Privatization and Foreign Competition (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:iuiwop:0545

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