Privatization and Foreign Competition
نویسنده
چکیده
This paper determines the equilibrium market structure in a mixed international oligopoly, where the state assets are sold at an auction. The model suggests that low greenÞeld costs and low trade costs induce foreign acquisitions. The intuition is that domestic Þrms can then not prevent foreign Þrms from becoming strong competitors and thus, their willingness to pay for the state assets is low. We also Þnd that proÞt shifting from domestic to foreign Þrms generated by National Treatments clauses is partly paid for by the foreign investor in the bidding competition over the state assets.
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