%0 Journal Article
%T The Relationship between Privatization and Regulation on Foreign Investment Policies
%A Lihua Han
%A Hikaru Ogawa
%J Theoretical Economics Letters
%P 97-102
%@ 2162-2086
%D 2015
%I Scientific Research Publishing
%R 10.4236/tel.2015.51014
%X Using a simple mixed oligopoly model, this paper examines the
relationship between mar</span><span style=\"font-family:Verdana;\">ket-</span><span style=\"font-family:Verdana;\">open</span><span style=\"font-family:Verdana;\">ings to foreign capital and privatization of a
domestic public firm. Two types of market-openings </span><span style=\"font-family:Verdana;\">are considered. First
is that, given the number of the firms, the restriction on the share of foreign
capital in each corporate joint venture is relaxed. Second is that, given the
share of foreign capital in each corporate joint venture, the restriction on
the number of the firms is relaxed. The analysis shows that the optimal level
of privatization critically depends on the types of market openings to foreign
capital. The optimal level of privatization declines as the share of foreign capital
in each corporate joint venture increases. By contrast, the optimal level of
privatization rises with an increase in the number of the firms operating in
the market. The two different strategies for market-</span><span style=\"font-family:Verdana;\">openings result in the opposite impacts on the welfare-maximizing
government¡¯s incentive for </span><span style=\"font-family:Verdana;\">privatization.
%K Regulation on Foreign Investment
%K Partial Privatization
%K Mixed Oligopoly
%U http://www.scirp.org/journal/PaperInformation.aspx?PaperID=54026