Privatization, productive efficiency and social welfare with a foreign competitor |
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Authors: | Yoshihiro Tomaru |
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Institution: | aGraduate School of Economics, Waseda University, 1-6-1 Nishiwaseda, Shinjuku-ku, Tokyo 169-8050, Japan |
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Abstract: | We investigate how decision-making upon cost-reducing R&D investment by a domestic public firm is affected by privatization and entry of a foreign firm. It is shown that entry of a foreign firm lowers productive efficiency of the domestic public firm but improves the domestic social welfare. It is also shown that privatization of the public firm lowers productive efficiency and deteriorates domestic social welfare. |
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Keywords: | Public firm Private firm Productive efficiency Social welfare |
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