Working Paper Series
Endogenous Asset Ownership Structures in Deregulated Markets
() and Lars Persson
Abstract: This paper determines the equilibrium ownership structure
in an emerging market deregulated by privatization and investment
liberalization. It is shown that bidding competition in the privatization
stage is necessary but not sufficient for reaching an efficient equilibrium
market structure. Competition in the ensuing entry stage is also necessary.
Otherwise, one firm can induce another to take the role of the weak firm in
the subsequent product market competition, by making concessions in the
bidding in the privatization auction. It is also shown that Employment
Guarantees may "help" the buyer of the privatized firm "abstain" from
investing and by that creating a less competitive market structure.
Keywords: Privatization; Ownership; FDI; Auctions; Employment Guarantees; (follow links to similar papers)
JEL-Codes: D44; F23; L10; L40; (follow links to similar papers)
33 pages, October 27, 2003
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