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Do Partial Cross Ownership and Budget Constraints Matter for Privatization Policy?

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  • Leonard Wang

    ()

  • Chu Hsu

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  • Jen Lee

    ()

Abstract

We show that in the presence of cross-ownership associated with an improvement of production inefficiency of the public firm, the optimal privatization policy is full privatization whether budget constraints are imposed on the public firm. For reaching a higher level of social welfare, the government does not need to impose budget constraints on the public firm when the fixed cost is low. Copyright Springer Science+Business Media New York 2014

Suggested Citation

  • Leonard Wang & Chu Hsu & Jen Lee, 2014. "Do Partial Cross Ownership and Budget Constraints Matter for Privatization Policy?," Journal of Industry, Competition and Trade, Springer, vol. 14(4), pages 519-529, December.
  • Handle: RePEc:kap:jincot:v:14:y:2014:i:4:p:519-529
    DOI: 10.1007/s10842-013-0174-9
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    References listed on IDEAS

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