Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/94757
Authors: 
Persson, Lars
Norbäck, Pehr-Johan
Year of Publication: 
2001
Series/Report no.: 
IUI Working Paper 545
Abstract: 
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 greenfield costs and low trade costs induce foreign acquisitions. The intuition is that domestic firms can then not prevent foreign firms from becoming strong competitors and thus, their willingness to pay for the state assets is low. We also find that profit shifting from domestic to foreign firms generated by National Treatments clauses is partly paid for by the foreign investor in the bidding competition over the state assets.
Subjects: 
Privatization
Failing firms
FDI
Acquisitions
National treatment
JEL: 
F23
L13
L33
Document Type: 
Working Paper

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