Knowledge transfer incentives and optimal privatization via rival’s partial equity ownership

Fenghui Lai, Dazhong Wang and Nan Yang

Economics Letters, 2021, vol. 206, issue C

Abstract: This study considers the government’s optimal strategy for partial privatization of a public firm via private rival’s partial equity ownership when incentivizing the private firm to transfer cost-reducing knowledge matters. When facing majority shareholding constraint, it is optimal for the government to privatize the public firm at a degree that exactly incentivizes knowledge transfer if knowledge value is intermediate, otherwise no privatization is optimal. Privatization increases social welfare but decreases consumer surplus. We also discuss the case when the government faces no minimal shareholding constraint.

Keywords: Knowledge transfer; Partial privatization; Partial equity ownership (search for similar items in EconPapers)
JEL-codes: D43 H44 L33 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:206:y:2021:i:c:s0165176521002470

DOI: 10.1016/j.econlet.2021.109970

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