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Does technology licensing matter for privatization?
Author(s) -
Wang Leonard F. S.,
Mukherjee Arijit,
Zeng Chenhang
Publication year - 2020
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/jpet.12431
Subject(s) - oligopoly , yield (engineering) , business , private enterprise , private sector , industrial organization , economics , market economy , cournot competition , finance , microeconomics , materials science , metallurgy , economic growth
In mixed oligopolies, technology licensing from a cost‐efficient firm to a cost‐inefficient firm has been widely observed. This paper examines the relationship between privatization and licensing (by public or private firms) with the consideration of either a domestic or a foreign private firm. We find that (a) in the case of a domestic private firm, public licensing facilitates privatization, but private licensing hinders privatization; (b) in the case of a foreign private firm, both public and private licensing facilitate privatization. Our results yield important policy implications on privatization.