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Privatization in the presence of foreign competition and strategic policies

Dijkstra, Bouwe; Mathew, Anuj; Mukherjee, Arijit


Anuj Mathew


Recent evidence shows that developing and transition economies are increasingly privatizing their public firms and also experiencing rapid growth of inward foreign direct investment (FDI). In an international mixed oligopoly with strategic tax/subsidy policies, we analyze the interaction between privatization and FDI. We find that the incentive for FDI increases with privatization. However, the possibility of FDI reduces the degree of privatization. Our paper shows that FDI policies reducing the fixed-cost of undertaking FDI may need to complement the privatization policies to attract FDI and to improve domestic welfare.


Dijkstra, B., Mathew, A., & Mukherjee, A. (2014). Privatization in the presence of foreign competition and strategic policies. Journal of Economics, 114(3),

Journal Article Type Article
Publication Date Jun 19, 2014
Deposit Date Jan 22, 2016
Publicly Available Date Jan 22, 2016
Journal Journal of Economics
Print ISSN 0976-5239
Electronic ISSN 0931-8658
Publisher Kamla-Raj Enterprises
Peer Reviewed Peer Reviewed
Volume 114
Issue 3
Public URL
Publisher URL


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