Working Paper Series
Privatization Policy in an International Oligopoly
() and Lars Persson
Abstract: This paper studies privatization policy in an
international oligopoly. The argument that equal treatment of foreign
investors will be detrimental to domestic welfare by shifting profits from
domestic to foreign firms is shown to be less relevant in privatization
auctions than in greenfield FDI models, since these profit shifts are
partly paid for by the foreign firms in the bidding competition. Effects of
local equity requirements, trade and investment policies are also studied.
It is, for instance, shown that small local equity requirements are likely
to be beneficial but large ones are counterproductive, by preventing
welfare-enhancing foreign acquisitions.
Keywords: Privatization; Acquisitions; National Treatment; Investment Policy; Trade Policy; (follow links to similar papers)
JEL-Codes: F23; L13; L33; (follow links to similar papers)
30 pages, November 25, 2003
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