IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/88564.html
   My bibliography  Save this paper

Implicit Protectionism via State Enterprises and Technology Transfer from Foreign Enterprises

Author

Listed:
  • 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
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/88564/1/MPRA_paper_88564.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Chad Syverson, 2011. "What Determines Productivity?," Journal of Economic Literature, American Economic Association, vol. 49(2), pages 326-365, June.
    2. Susumu Cato & Toshihiro Matsumura, 2012. "Long-Run Effects of Foreign Penetration on Privatization Policies," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 168(3), pages 444-454, September.
    3. Przemyslaw Kowalski & Max Büge & Monika Sztajerowska & Matias Egeland, 2013. "State-Owned Enterprises: Trade Effects and Policy Implications," OECD Trade Policy Papers 147, OECD Publishing.
    4. Seung-Leul Kim & Sang-Ho Lee & Toshihiro Matsumura, 2018. "Eco-technology licensing by a foreign innovator and privatization policy in a polluting mixed duopoly," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 25(3-4), pages 433-448, May.
    5. Tai-Liang Chen, 2017. "Privatization and efficiency: a mixed oligopoly approach," Journal of Economics, Springer, vol. 120(3), pages 251-268, April.
    6. Susumu Sato & Toshihiro Matsumura, 2019. "Dynamic Privatization Policy," Manchester School, University of Manchester, vol. 87(1), pages 37-59, January.
    7. Matthias Arnold, Jens & Javorcik, Beata S., 2009. "Gifted kids or pushy parents? Foreign direct investment and plant productivity in Indonesia," Journal of International Economics, Elsevier, vol. 79(1), pages 42-53, September.
    8. Debashis Pal & Mark D. White, 1998. "Mixed Oligopoly, Privatization, and Strategic Trade Policy," Southern Economic Journal, John Wiley & Sons, vol. 65(2), pages 264-281, October.
    9. Xu, Lili & Lee, Sang-Ho & Matsumura, Toshihiro, 2017. "Ex-ante versus ex-post privatization policies with foreign penetration in free-entry mixed markets," International Review of Economics & Finance, Elsevier, vol. 50(C), pages 1-7.
    10. Sato, Susumu & Matsumura, Toshihiro, 2019. "Shadow cost of public funds and privatization policies," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    11. Maria Guadalupe & Olga Kuzmina & Catherine Thomas, 2012. "Innovation and Foreign Ownership," American Economic Review, American Economic Association, vol. 102(7), pages 3594-3627, December.
    12. Ogura, Yoshiaki, 2018. "The objective function of government-controlled banks in a financial crisis," Journal of Banking & Finance, Elsevier, vol. 89(C), pages 78-93.
    13. Maria José Gil-Moltó & Joanna Poyago-Theotoky & Vasileios Zikos, 2011. "R&D Subsidies, Spillovers, and Privatization in Mixed Markets," Southern Economic Journal, John Wiley & Sons, vol. 78(1), pages 233-255, July.
    14. Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
    15. Haraguchi, Junichi & Matsumura, Toshihiro & Yoshida, Shohei, 2018. "Competitive pressure from neighboring markets and optimal privatization policy," Japan and the World Economy, Elsevier, vol. 46(C), pages 1-8.
    16. Matsumura, Toshihiro, 1998. "Partial privatization in mixed duopoly," Journal of Public Economics, Elsevier, vol. 70(3), pages 473-483, December.
    17. Toshihiro Matsumura & Osamu Kanda, 2005. "Mixed Oligopoly at Free Entry Markets," Journal of Economics, Springer, vol. 84(1), pages 27-48, February.
    18. Pal, Debashis, 1998. "Endogenous timing in a mixed oligopoly," Economics Letters, Elsevier, vol. 61(2), pages 181-185, November.
    19. Matsumura, T., 1995. "Competition Between Public and Private Firms," ISER Discussion Paper 0394, Institute of Social and Economic Research, Osaka University.
    20. Barcena-Ruiz, Juan Carlos & Begona Garzon, Maria, 2005. "Economic integration and privatisation under diseconomies of scale," European Journal of Political Economy, Elsevier, vol. 21(1), pages 247-267, March.
    21. Sang-Ho Lee & Toshihiro Matsumura & Susumu Sato, 2018. "An analysis of entry-then-privatization model: welfare and policy implications," Journal of Economics, Springer, vol. 123(1), pages 71-88, January.
    22. Juan Carlos Bárcena‐Ruiz & María Begoña Garzón, 2005. "International Trade and Strategic Privatization," Review of Development Economics, Wiley Blackwell, vol. 9(4), pages 502-513, November.
    23. 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.
    24. Giacomo Corneo & Oliver Jeanne, 1994. "Oligopole mixte dans un marché commun," Annals of Economics and Statistics, GENES, issue 33, pages 73-90.
    25. repec:adr:anecst:y:1994:i:33:p:06 is not listed on IDEAS
    26. Gelves, Juan Alejandro & Heywood, John S., 2016. "How does a mixed ownership firm license a patent?," Economic Modelling, Elsevier, vol. 59(C), pages 278-284.
    27. Guangliang Ye, 2012. "Patent Licensing in a Mixed Oligopoly with a Foreign Firm," Economics Bulletin, AccessEcon, vol. 32(2), pages 1191-1197.
    28. Winston Chang, 2007. "Optimal trade, industrial, and privatization policies in a mixed duopoly with strategic managerial incentives," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 16(1), pages 31-52.
    29. Kenneth Fjell & Debashis Pal, 1996. "A Mixed Oligopoly in the Presence of Foreign Private Firms," Canadian Journal of Economics, Canadian Economics Association, vol. 29(3), pages 737-743, August.
    30. Alla Fridman, 2018. "Partial privatization in an exhaustible resource industry," Journal of Economics, Springer, vol. 124(2), pages 159-173, June.
    31. Winston W. Chang & Han Eol Ryu, 2015. "Vertically Related Markets, Foreign Competition and Optimal Privatization Policy," Review of International Economics, Wiley Blackwell, vol. 23(2), pages 303-319, May.
    32. Chia-Hui Huang & Chih-Hai Yang, 2016. "Ownership, trade, and productivity in Vietnam’s manufacturing firms," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 23(3), pages 356-371, July.
    33. Katja Seim & Joel Waldfogel, 2013. "Public Monopoly and Economic Efficiency: Evidence from the Pennsylvania Liquor Control Board's Entry Decisions," American Economic Review, American Economic Association, vol. 103(2), pages 831-862, April.
    34. Quan Dong & Juan Carlos Bárcena†Ruiz & María Begoña Garzón, 2018. "Partial Privatization of State Holding Corporations," Manchester School, University of Manchester, vol. 86(1), pages 119-138, January.
    35. Carlo Capuano & Giuseppe De Feo, 2010. "Privatization in Oligopoly: the Impact of the Shadow Cost of Public Funds," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 175-208.
    36. Xu, Lili & Lee, Sang-Ho & Wang, Leonard F.S., 2016. "Free trade agreements and privatization policy with an excess burden of taxation," Japan and the World Economy, Elsevier, vol. 37, pages 55-64.
    37. Maria José Gil-Moltó & Joanna Poyago-Theotoky & Vasileios Zikos, 2011. "R&D Subsidies, Spillovers, and Privatization in Mixed Markets," Southern Economic Journal, John Wiley & Sons, vol. 78(1), pages 233-255, July.
    38. Toshihiro Matsumura & Noriaki Matsushima, 2004. "Endogenous Cost Differentials between Public and Private Enterprises: A Mixed Duopoly Approach," Economica, London School of Economics and Political Science, vol. 71(284), pages 671-688, November.
    39. Ishibashi, Ikuo & Matsumura, Toshihiro, 2006. "R&D competition between public and private sectors," European Economic Review, Elsevier, vol. 50(6), pages 1347-1366, August.
    40. Winston Chang, 2005. "Optimal Trade and Privatization Policies in an International Duopoly with Cost Asymmetry," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 14(1), pages 19-42.
    41. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2017. "Privatization of state holding corporations," Journal of Economics, Springer, vol. 120(2), pages 171-188, March.
    42. Shuai Niu, 2015. "Privatization in the presence of patent licensing," Journal of Economics, Springer, vol. 116(2), pages 151-163, October.
    43. Toshihiro Matsumura & Akira Ogawa, 2010. "On The Robustness Of Private Leadership In Mixed Duopoly," Australian Economic Papers, Wiley Blackwell, vol. 49(2), pages 149-160, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    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. Madhuri H.Shastry & Uday Bhanu Sinha, 2023. "Privatization and Licensing under Public Budget Constraint," Working papers 343, Centre for Development Economics, Delhi School of Economics.
    3. Ziad Ghandour & Odd Rune Straume, 2022. "Optimal funding coverage in a mixed oligopoly with quality competition and price regulation," Journal of Economics, Springer, vol. 136(3), pages 201-225, August.
    4. Junichi Haraguchi & Toshihiro Matsumura, 2020. "Endogenous public and private leadership with diverging social and private marginal costs," Manchester School, University of Manchester, vol. 88(5), pages 699-730, September.
    5. 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.
    6. Jiaqi Chen & Sang‐Ho Lee & Timur K. Muminov, 2022. "R&D spillovers, output subsidies, and privatization in a mixed duopoly: Flexible versus irreversible R&D investments," Bulletin of Economic Research, Wiley Blackwell, vol. 74(3), pages 879-899, July.
    7. 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.
    8. 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.
    9. Junichi Haraguchi & Toshihiro Matsumura, 2021. "Profit‐enhancing entries in mixed oligopolies," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 33-55, July.
    10. Ryu, Han Eol, 2023. "Public utility ownership and in-kind trade policy in vertically related markets," Utilities Policy, Elsevier, vol. 81(C).
    11. Yi Liu & Leonard F.S. Wang & Chenhang Zeng, 2023. "Upstream privatization and downstream licensing," International Journal of Economic Theory, The International Society for Economic Theory, vol. 19(1), pages 148-165, March.
    12. Ding Chen & Leonard F. S. Wang & Ji Sun, 2023. "Does CSR influence privatization wave?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 1088-1097, March.
    13. Haraguchi, Junichi & Matsumura, Toshihiro, 2020. "Common Ownership among Private Firms and Privatization Policies," MPRA Paper 102152, University Library of Munich, Germany.
    14. Yang, Le & Huang, Zining, 2023. "Quality-improving licensing of an outside innovator in a mixed Cournot duopoly," Economic Modelling, Elsevier, vol. 126(C).
    15. Cho, Sumi & Kim, Doori & Lee, Sang-Ho, 2022. "Free licensing strategy and ex-post privatization policy with passive ownership," Economic Modelling, Elsevier, vol. 106(C).
    16. Lili Xu & Fanrui Su & Sang-Ho Lee, 2023. "Strategic corporate social responsibility and partial privatization policy with foreign penetration," The Japanese Economic Review, Springer, vol. 74(2), pages 251-278, April.
    17. 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.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yi Liu & Toshihiro Matsumura & Chenhang Zeng, 2021. "The relationship between privatization and corporate taxation policies," Journal of Economics, Springer, vol. 133(1), pages 85-101, June.
    2. Junichi Haraguchi & Toshihiro Matsumura, 2021. "Profit‐enhancing entries in mixed oligopolies," Southern Economic Journal, John Wiley & Sons, vol. 88(1), pages 33-55, July.
    3. Sato, Susumu & Matsumura, Toshihiro, 2019. "Shadow cost of public funds and privatization policies," The North American Journal of Economics and Finance, Elsevier, vol. 50(C).
    4. Haraguchi, Junichi & Matsumura, Toshihiro, 2020. "Common Ownership among Private Firms and Privatization Policies," MPRA Paper 102152, University Library of Munich, Germany.
    5. Haraguchi, Junichi & Matsumura, Toshihiro, 2020. "Lack of commitment to future privatization policies may lead to worst welfare outcome," Economic Modelling, Elsevier, vol. 88(C), pages 181-187.
    6. Junichi Haraguchi & Toshihiro Matsumura, 2020. "Endogenous public and private leadership with diverging social and private marginal costs," Manchester School, University of Manchester, vol. 88(5), pages 699-730, September.
    7. Sato, Susumu & Matsumura, Toshihiro, 2018. "Flexible Privatization Policy in Free-Entry Markets," MPRA Paper 88444, University Library of Munich, Germany.
    8. 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.
    9. 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.
    10. Haraguchi, Junichi & Matsumura, Toshihiro, 2018. "Multiple Long-Run Equilibria in a Free-Entry Mixed Oligopoly," MPRA Paper 86704, University Library of Munich, Germany.
    11. Haraguchi, Junichi & Matsumura, Toshihiro, 2017. "Firms' Costs, Profits, Entries, and Innovation under Optimal Privatization Policy," MPRA Paper 80927, University Library of Munich, Germany.
    12. Liu, Yi & Lahiri, Sajal & Liu, Tianqi, 2018. "Optimal Partial Privatization in the Presence of Foreign Competition: The Role of Efficiency Differentials and Unemployment," MPRA Paper 91471, University Library of Munich, Germany, revised 23 Jan 2019.
    13. Junichi Haraguchi & Toshihiro Matsumura, 2020. "Optimal privatization policy with asymmetry among private firms," Bulletin of Economic Research, Wiley Blackwell, vol. 72(3), pages 213-224, July.
    14. Juan Carlos Bárcena-Ruiz & María Begoña Garzón, 2020. "Partial privatization in an international mixed oligopoly under product differentiation," Journal of Economics, Springer, vol. 131(1), pages 77-100, September.
    15. Sang-Ho Lee & Toshihiro Matsumura & Susumu Sato, 2018. "An analysis of entry-then-privatization model: welfare and policy implications," Journal of Economics, Springer, vol. 123(1), pages 71-88, January.
    16. Akio Kawasaki & Takao Ohkawa & Makoto Okamura, 2022. "Optimal partial privatization in an endogenous timing game: a mixed oligopoly approach," Journal of Economics, Springer, vol. 136(3), pages 227-250, August.
    17. 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.
    18. Lin, Ming Hsin & Matsumura, Toshihiro, 2017. "Optimal Privatization and Uniform Subsidy Policies: A Synthesis," MPRA Paper 77285, University Library of Munich, Germany.
    19. Haraguchi, Junichi & Matsumura, Toshihiro & Yoshida, Shohei, 2018. "Competitive pressure from neighboring markets and optimal privatization policy," Japan and the World Economy, Elsevier, vol. 46(C), pages 1-8.
    20. Susumu Sato & Toshihiro Matsumura, 2019. "Dynamic Privatization Policy," Manchester School, University of Manchester, vol. 87(1), pages 37-59, January.

    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

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:88564. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.