Partial Privatization of State Holding Corporations

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We consider a state holding corporation with two plants that may produce complement or substitute goods and that compete with one or two private firms. We find that the government partially privatizes the two plants of the state holding corporation and is indifferent between selling them partially to a single investor or to different investors. However, in the former case the government retains a greater (lower) stake in the state corporation if goods are substitutes (complements).