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Shared Equity Policy in Joint Ventures for Host Countries

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  • Mei-Fang Chung

    ()
    (Department of International Trade, Kun Shan University, Taiwan)

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    Abstract

    This paper provides a game model for examining the host overseas investment policy and MNEs equity strategy in international joint ventures. This paper refines previous Chen & Chung’s (2008) results and considers the host policy about MNEs’ joint-venture. This paper shows foreign firms increase their technology transfer incentive because less competition from the joint-venture partner when a foreign firm holds lower shares. And the holding shares of foreign firms must be not smaller than 50 percent. The host welfare increases with foreign firms’ minority equity. The equity conflict exists in the higher technology spillover and transfer cost cases. Hence, the host governments always impose investment restrictions on MNEs in the Developing countries. Otherwise, it has more loose policy in the Developed countries.

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    Bibliographic Info

    Article provided by Queensland University of Technology (QUT), School of Economics and Finance in its journal Economic Analysis and Policy (EAP).

    Volume (Year): 41 (2011)
    Issue (Month): 2 (September)
    Pages: 189-202

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    Handle: RePEc:eap:articl:v:41:y:2011:i:2:p:189-202

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    Related research

    Keywords: joint venture; equity policy; welfare; technology transfer; spillover;

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    References

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    1. Müller, Thomas & Schnitzer, Monika, 2003. "Technology Transfer and Spillovers in International Joint Ventures," CEPR Discussion Papers 4099, C.E.P.R. Discussion Papers.
    2. Magnus Blomstrom & Fredrik Sjoholm, 1998. "Technology Transfer and Spillovers? Does Local Participation with Multinationals Matter?," NBER Working Papers 6816, National Bureau of Economic Research, Inc.
    3. David C. Mowery, 1992. "The Taiwan aerospace-mcdonnell douglas agreement: A modest expansion of the trend toward globalization in aerospace," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 11(3), pages 476-481.
    4. Teng, Jinn-Tsair & Chern, Maw-Sheng & Kim, Ki-Hee, 2001. "Entry strategies for multinational enterprises and host countries," European Journal of Operational Research, Elsevier, vol. 133(1), pages 62-68, August.
    5. Mukherjee, Arijit & Sengupta, Sarbajit, 2001. "Joint Ventures versus Fully Owned Subsidiaries: Multinational Strategies in Liberalizing Economies," Review of International Economics, Wiley Blackwell, vol. 9(1), pages 163-80, February.
    6. Donald J Lecraw, 1984. "Bargaining Power, Ownership, and Profitability of Transnational Corporations in Developing Countries," Journal of International Business Studies, Palgrave Macmillan, vol. 15(1), pages 27-43, March.
    7. Mihir A. Desai & C. Fritz Foley & James R. Hines, Jr., 2002. "The Costs of Shared Ownership: Evidence from International Joint Ventures," NBER Chapters, in: Corporate Alliances National Bureau of Economic Research, Inc.
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