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Privatization Policy in an International Oligopoly

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  • Norbäck, Pehr-Johan

    ()
    (The Research Institute of Industrial Economics)

  • Persson, Lars

    ()
    (The Research Institute of Industrial Economics)

Abstract

This paper studies privatization policy in an international oligopoly. The argument that equal treatment of foreign investors will be detrimental to domestic welfare by shifting profits from domestic to foreign firms is shown to be less relevant in privatization auctions than in greenfield FDI models, since these profit shifts are partly paid for by the foreign firms in the bidding competition. Effects of local equity requirements, trade and investment policies are also studied. It is, for instance, shown that small local equity requirements are likely to be beneficial but large ones are counterproductive, by preventing welfare-enhancing foreign acquisitions.

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Bibliographic Info

Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 608.

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Length: 30 pages
Date of creation: 25 Nov 2003
Date of revision:
Handle: RePEc:hhs:iuiwop:0608

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Keywords: Privatization; Acquisitions; National Treatment; Investment Policy; Trade Policy;

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References

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  1. Horn, Henrik & Levinsohn, James, 2001. "Merger Policies and Trade Liberalisation," Economic Journal, Royal Economic Society, vol. 111(470), pages 244-76, April.
  2. James R. Markusen, 1997. "Trade versus Investment Liberalization," NBER Working Papers 6231, National Bureau of Economic Research, Inc.
  3. Horstmann, Ignatius J. & Markusen, James R., 1992. "Endogenous market structures in international trade (natura facit saltum)," Journal of International Economics, Elsevier, vol. 32(1-2), pages 109-129, February.
  4. Ellingsen, T. & Warneryd, K., 1993. "Foreign direct investment and the political economy of protection," Discussion Paper 1993-8, Tilburg University, Center for Economic Research.
  5. Schmidt, Klaus M. & Schnitzer, Monika, 1997. "Methods of Privatization: Auctions, Bargaining and Give-Aways," CEPR Discussion Papers 1541, C.E.P.R. Discussion Papers.
  6. Konrad, K.A. & Lommerud, K.E., 2001. "Foreign Direct Investment, Intra-firm Trade and Ownership Structure," Norway; Department of Economics, University of Bergen 219, Department of Economics, University of Bergen.
  7. Norbäck, Pehr-Johan & Persson, Lars, 2001. "Privatization and Foreign Competition," CEPR Discussion Papers 2735, C.E.P.R. Discussion Papers.
  8. Valerie A. Ramey & Matthew D. Shapiro, 2001. "Displaced Capital: A Study of Aerospace Plant Closings," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 958-992, October.
  9. Horn, Henrik & Persson, Lars, 2001. "The equilibrium ownership of an international oligopoly," Journal of International Economics, Elsevier, vol. 53(2), pages 307-333, April.
  10. Steffen Huck & Kai A. Konrad, 2004. "Merger Profitability and Trade Policy," Scandinavian Journal of Economics, Wiley Blackwell, vol. 106(1), pages 107-122, 03.
  11. Hoekman, Bernard & Saggi, Kamal, 2002. "Trade versus Direct Investment: Modal Neutrality and National Treatment," CEPR Discussion Papers 3375, C.E.P.R. Discussion Papers.
  12. Ignatius J. Horstmann & James R. Markusen, 1990. "Endogenous Market Structures in International Trade," NBER Working Papers 3283, National Bureau of Economic Research, Inc.
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Citations

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Cited by:
  1. Yildiz, Halis Murat & Ulus, Aysegul, 2011. "On the relationship between tariff levels and the nature of mergers," MPRA Paper 35021, University Library of Munich, Germany.
  2. Norbäck, Pehr-Johan & Persson, Lars, 2008. "Cross-Border Mergers & Acquisitions Policy in Service Markets," Working Paper Series 743, Research Institute of Industrial Economics.
  3. Stennek, Johan, 2007. "Exclusive Quality - Why Exclusive Distribution May Benefit the TV Viewers," CEPR Discussion Papers 6072, C.E.P.R. Discussion Papers.
  4. Karl-Markus Modén & Pehr-Johan Norbäck & Lars Persson, 2008. "Efficiency and Ownership Structure: The Case of Poland," The World Economy, Wiley Blackwell, vol. 31(3), pages 437-460, 03.
  5. Norbäck, Pehr-Johan & Persson, Lars, 2005. "Investment Liberalization - Why a Restrictive Cross-Border Merger Policy can be Counterproductive," Working Paper Series 644, Research Institute of Industrial Economics.
  6. Norbäck, Pehr-Johan & Persson, Lars & Vlachos, Jonas, 2006. "Cross-Border Acquisitions and Corporate Taxes: Efficiency and Tax Revenues," Working Paper Series 663, Research Institute of Industrial Economics.
  7. Toshihiro Matsumura & Noriaki Matsushima & Ikuo Ishibashi, 2009. "Privatization and entries of foreign enterprises in a differentiated industry," Journal of Economics, Springer, vol. 98(3), pages 203-219, December.
  8. Stennek, Johan, 2014. "Exclusive quality – Why exclusive distribution may benefit the TV-viewers," Information Economics and Policy, Elsevier, vol. 26(C), pages 42-57.
  9. Beladi, Hamid & Chakrabarti, Avik, 2008. "Foreign equity participation under incomplete information," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 279-295, July.
  10. Onur Koska, 2009. "Foreign Direct Investment For Sale," Working Papers 0910, University of Otago, Department of Economics, revised Oct 2009.

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