Privatization and entries of foreign enterprises in a differentiated industry

Toshihiro Matsumura, Noriaki Matsushima and Ikuo Ishibashi
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Ikuo Ishibashi: Department of Economics, Aoyama Gakuin University

No 2007-01, Discussion Papers from Kobe University, Graduate School of Business Administration

Abstract: We investigate whether or not privatization is beneficial from the viewpoint of social welfare in a monopolistic competition model. We discuss the relationship between the welfare effects of privatization and the degree of foreign direct investment in the private sector, which is an important problem in developing countries and in transition economies such as China and Central and Eastern European countries. We find that, in the long run, privatization of a public firm is more likely to improve welfare when the country depends on foreign capital in the private sector, whereas the opposite tendency exists in the short run.

Keywords: mixed oligopoly; privatization; product differentiation; foreign firms; free entry (search for similar items in EconPapers)
JEL-codes: C72 H42 L13 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2007-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Privatization and entries of foreign enterprises in a differentiated industry (2009)
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