Foreign penetration and undesirable competition |
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| Institution: | 1. Department of Applied Economics, National University of Kaohsiung, Taiwan, ROC;2. Department of International Business, National Kaohsiung University of Applied Science, Taiwan, ROC;1. Department of Money and Banking, National Chengchi University, Taipei, Taiwan, ROC;2. Actuarial Department, Taiwan Life Insurance Co. Ltd, Taiwan, ROC;1. Center for Energy Development and Environment Protection Strategy Research, Faculty of Science, Jiangsu University, Zhenjiang, Jiangsu 212013, China;2. School of Mathematical Sciences, Nanjing Normal University, Nanjing 210046, China;1. Department of Business Administration, Hong Kong Shue Yan University, Brae-mar Hill Road, North Point, Hong Kong;2. Business School, Collaborative Innovation Centre for State-owned Assets Administration, Beijing Technology and Business University. No. 33 of Fucheng Road, Haidian District, Beijing 100084, China;1. CREM–CNRS, University of Rennes 1, France;2. CREM–CNRS, University of Caen, France |
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| Abstract: | This paper examines how the order of the firms' moves affects the social efficiency with foreign ownership and free entry in a mixed oligopoly market. We firstly show that when the foreign shareholding ratio is low, the entry of private followers will lead to a lower consumer welfare and higher social welfare, while the profit of the incumbent nationalized firm is higher under entry than under no entry. Further, we find that there always exists the problem of excessive entry under public leadership regardless of the degree of foreign ownership. Such result is generated by the complementary role played by the leading public firm and the strength of business-stealing effect. Our results thus have important implications for industrial and market-opening policies. |
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