Long-Run Effects of Foreign Penetration on Privatization Policies
Sususmu Cato () and
Toshihiro Matsumura ()
Journal of Institutional and Theoretical Economics (JITE), 2012, vol. 168, issue 3, 444-454
This paper investigates the long-run effect of foreign penetration in product markets on privatization policies. We find that the optimal degree of privatization is increasing in foreign penetration. This result is in sharp contrast to the existing short-run result that it is decreasing. Our result suggests that from a long-run viewpoint, the country with a more open market should promote the privatization of public enterprises, even though this reduces welfare in the short run.
JEL-codes: H42 L13 (search for similar items in EconPapers)
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