Privatization and foreign competition |
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Authors: | Pehr-Johan Norbä ck |
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Affiliation: | Research Institute of Industrial Economics, P.O. Box 5501, SE-114 85 Stockholm, Sweden |
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Abstract: | This paper determines the equilibrium market structure in an international oligopoly, where a state enterprise is sold at an auction. The paper suggests that high greenfield costs and high trade costs do not necessarily induce foreign acquisitions in privatizations, despite the fact that foreign firms would gain considerably from acquiring in such situations. The reason is that domestic firms can then prevent foreign firms from becoming strong local competitors and thus, their willingness to pay for the state assets is high. |
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Keywords: | Privatization FDI Acquisitions Investment liberalization Tariff-jumping |
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