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International joint venture and welfare-improving tariff-tax reforms

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  • Zou, Yuxiang
  • Chen, Tai-Liang

Abstract

This paper examines the welfare effects of two tariff-tax reforms—point-by-point and world-price-fixing—under an asymmetric duopoly in the presence of an international joint venture (IJV). If the host government implements a point-by-point reform, the welfare effect is highly relevant to the domestic rival's profit margin and the equity share of the host partner in the IJV. Welfare may increase based upon the extent of share threshold. If the government implements a world-price-fixing reform, together with profit-shifting effect, the reform will reduce welfare in the host country. Furthermore, an increase in the domestic rival's profit margin strengthens welfare loss.

Suggested Citation

  • Zou, Yuxiang & Chen, Tai-Liang, 2016. "International joint venture and welfare-improving tariff-tax reforms," International Review of Economics & Finance, Elsevier, vol. 46(C), pages 27-35.
    • Handle: RePEc:eee:reveco:v:46:y:2016:i:c:p:27-35
    DOI: 10.1016/j.iref.2016.07.017
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    Cited by:

    1. Aguir, Iness & Misra, Lalatendu, 2017. "Ownership level choice and value creation in international joint ventures: The role of investor protection," International Review of Economics & Finance, Elsevier, vol. 49(C), pages 515-535.

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    More about this item

    Keywords

    Asymmetric duopoly; International joint venture; Excise duty; Tariff-tax reforms; Welfare;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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