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Cover of: Long-Run Effects of Foreign Penetration on Privatization Policies
Susumu Cato, Toshihiro Matsumura

Long-Run Effects of Foreign Penetration on Privatization Policies

Section: Articles
Volume 168 (2012) / Issue 3, pp. 444-454 (11)
Published 09.07.2018
DOI 10.1628/093245612802920999
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  • 10.1628/093245612802920999
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Summary
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.