On the FDI-Attracting Property of Privatization

Amerighi, Oscar and De Feo, Giuseppe (2010) On the FDI-Attracting Property of Privatization. Discussion paper. University of Strathclyde, Glasgow.

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Abstract

In this paper, we provide an explanation of why privatization may attract foreign investors willing to enter a regional market. Privatization turns the formerly-public firm into a less aggressive competitor since profit-maximizing output is lower than the welfaremaximizing one. The drawback is that social welfare generally decreases. We also investigate tax/subsidy competition for FDI and put forward its potentially positive role. On the one hand, it may reduce the negative impact on welfare of an FDI-attracting privatization. On the other hand, it may prevent a welfare-reducing investment by the foreign firm. This sheds light on the substitute/complementary relationship between the two policies and the two objectives of governments.

ORCID iDs

Amerighi, Oscar and De Feo, Giuseppe ORCID logoORCID: https://orcid.org/0000-0002-2085-1756;
  • Item type:Monograph(Discussion paper)
    ID code:67841
    Dates:
    Date
    Event
    28 February 2010
    Published
    Notes:Published as a paper within the Discussion Papers in Economics, No. 10-07 (2010)
    Subjects:Social Sciences > Economic Theory
    Department:Strathclyde Business School > Economics
    Depositing user: Pure Administrator
    Date deposited:14 May 2019 14:32
    Last modified:17 Nov 2024 01:36
    Related URLs:
    URI:https://strathprints.strath.ac.uk/id/eprint/67841
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