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Presence of foreign investors in privatized firms and privatization policy

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  • Ming Lin

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  • Toshihiro Matsumura

Abstract

This paper investigates how the presence of foreign investors in privatized firms affects privatization policy in a mixed oligopoly. We find that an increase in the stockholding ratio of foreign investors in a privatized firm increases the optimal degree of privatization, whereas an increase in the penetration of foreign firms in product markets reduces it. These results imply that the degree of openness of financial markets and that of product markets have contrasting implications for the optimal privatization policy. Copyright Springer-Verlag 2012

Suggested Citation

  • Ming Lin & Toshihiro Matsumura, 2012. "Presence of foreign investors in privatized firms and privatization policy," Journal of Economics, Springer, vol. 107(1), pages 71-80, September.
  • Handle: RePEc:kap:jeczfn:v:107:y:2012:i:1:p:71-80
    DOI: 10.1007/s00712-011-0254-4
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    References listed on IDEAS

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    Keywords

    Partial privatization; Foreign investment in privatized firms; Foreign private competitors; H42; F13; L13;

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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