Original Article
Foreign-Owned Firms and Partial Privatisation of State Holding Corporations
First published: 12 February 2019
Abstract
We consider a state holding corporation with two plants producing heterogeneous goods. In the partially foreign-owned private sector, firms may be organised as uniplant or multiplant. We find that the stake that the government retains in the state corporation depends on whether goods are substitutes or complements, whether private firms are uniplant or multiplant, and the percentage of foreign ownership in private firms. The main result is that when foreign ownership is high, there is more privatisation with uniplant (multiplant) private firms if goods are substitutes (complements). However, when foreign ownership is low, the opposite result is obtained.
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