Privatization and Restructuring in Concentrated Markets

No 2004.107, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper examines the restructuring of state assets in markets deregulated by privatizations and investment liberalizations. We show that the government has a stronger incentive to restructure than the buyer: A firm restructuring only takes into account how much its own profit will increase. The government internalizes that restructuring increases the sales price not only from the increase in the acquirer’s profit, but also from a reduced profit for the non-acquirer, whose profits decrease due to its rival’s restructuring. We also identify situations where a slow sale can significantly reduce the sales price because of strategic investment and product market effects.

Keywords: Privatization; Asset ownership; Restructuring (search for similar items in EconPapers)
JEL-codes: D44 L1 L33 L4 P31 (search for similar items in EconPapers)
Date: 2004-07
New Economics Papers: this item is included in nep-mic and nep-reg
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Related works:
Working Paper: Privatization and Restructuring in Concentrated Markets (2005)
Working Paper: Privatization and Restructuring in Concentrated Markets (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:fem:femwpa:2004.107

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