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Shared Equity Policy in Joint Ventures for Host Countries

Author

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  • Mei-Fang Chung

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

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.

Suggested Citation

  • Mei-Fang Chung, 2011. "Shared Equity Policy in Joint Ventures for Host Countries," Economic Analysis and Policy, Elsevier, vol. 41(2), pages 189-202, September.
    • Handle: RePEc:eee:ecanpo:v:41:y:2011:i:2:p:189-202
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    More about this item

    Keywords

    joint venture; equity policy; welfare; technology transfer; spillover;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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