How Much Should You Own? Cross-ownership and Privatization
AbstractThis paper examines the interdependence of cross-ownership and level of privatization in case of differentiated products mixed duopoly. It shows that it is optimal for the private firm not to own any (own the entire) portion of the privatized share of its rival firm, if the level of privatization is very low (very high). In equilibrium, the government makes sure that cross-ownership is not attracted. However, in most of the situations, the possibility of cross-ownership adversely affects the prospect of privatization. Results of this paper have strong implications to antitrust regulations and divestment policies. [Working paper No. 2010-015].
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Date of creation: Sep 2010
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divestment; developing; transition econoies; firm; industry; consumenr; social welfare; competition; shareholder; Cross-ownership; mixed duopoly; partial privatization; product differentiation;
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-09-11 (All new papers)
- NEP-BEC-2010-09-11 (Business Economics)
- NEP-COM-2010-09-11 (Industrial Competition)
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