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Implicit Protectionism via State Enterprises and Technology Transfer from Foreign Enterprises

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  • Haraguchi, Junichi
  • Matsumura, Toshihiro

Abstract

We formulate a mixed triopoly in which one state enterprise competes with one domestic and one foreign private enterprise. The private enterprise can transfer its technology to the private rival, which reduces the rival's production cost. We show that if the privatization policy is endogenous, the foreign firm voluntary transfers its technology, even without fees. We also show that the domestic private firm does not transfer its technology to the foreign firm. Consequently, the domestic private enterprise extracts rents from the foreign enterprise and increases its market share. We also show that the foreign enterprise may strategically raise its local ownership share, which implies that the existence of a state enterprise and its potential future privatization serve as an industrial policy that improves the domestic firm's competitive advantage relative to the foreign enterprise or the implicit foreign ownership regulation.

Suggested Citation

  • Haraguchi, Junichi & Matsumura, Toshihiro, 2018. "Implicit Protectionism via State Enterprises and Technology Transfer from Foreign Enterprises," MPRA Paper 88564, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:88564
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    Cited by:

    1. Haraguchi, Junichi & Matsumura, Toshihiro, 2021. "Market Concentration, Privatization Policies, and Heterogeneity among Private Firms in Mixed Oligopolies," MPRA Paper 106975, University Library of Munich, Germany.
    2. Haraguchi, Junichi & Matsumura, Toshihiro, 2020. "Common Ownership among Private Firms and Privatization Policies," MPRA Paper 102152, University Library of Munich, Germany.
    3. Leonard F. S. Wang & Arijit Mukherjee & Chenhang Zeng, 2020. "Does technology licensing matter for privatization?," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(5), pages 1462-1480, September.
    4. Cho, Sumi & Kim, Doori & Lee, Sang-Ho, 2021. "Free licensing strategy and ex post privatization in a mixed oligopoly," MPRA Paper 106126, University Library of Munich, Germany.
    5. Liu, Yi & Tan, Yu & Fang, Yu, 2019. "Innovation spillover, licensing, and ex-post privatization in international duopoly," MPRA Paper 95467, University Library of Munich, Germany.
    6. Xu, Lili & Lee, Sang-Ho, 2021. "Strategic corporate social responsibility and tariff policies: The timing of commitments and policy implications," MPRA Paper 108499, University Library of Munich, Germany.

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    More about this item

    Keywords

    industry policy; mixture ownership; voluntary technology transfer; constant marginal costs; endogenous foreign ownership share;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H44 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Goods: Mixed Markets
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

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