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International Joint Ventures: A Welfare Analysis

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Author Info

  • Indrani Roy Chowdhury
  • Prabla Roy Chowdhury

Abstract

We examine the welfare implications of joint venture formation between an MNC and a firm from a less developed country (LDC). For symmetric firms greater the market size, greater is the incentive for joint venture formation. Moreover, joint venture formation is welfare reducing for both high, as well as low levels of demand. However, if the MNC is more efficient compared to the LDC firm then the results are different. We find that smaller the market size greater the incentive for joint venture formation. Moreover, joint venture formation is welfare enhancing for both high, as well as low levels of demand.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/13841280212384
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Journal of Economic Policy Reform.

Volume (Year): 5 (2002)
Issue (Month): 1 ()
Pages: 51-60

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Handle: RePEc:taf:jpolrf:v:5:y:2002:i:1:p:51-60

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Related research

Keywords: Joint Ventures; Synergy; Moral Hazard; Welfare;

References

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  1. Marjit, Sugata, 1991. "Incentives for cooperative and non-cooperative R and D in duopoly," Economics Letters, Elsevier, vol. 37(2), pages 187-191, October.
  2. Choi, Jay Pil, 1993. "Cooperative R&D with product market competition," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 553-571.
  3. Miller, R-R & Glen, J-D & Jaspersen, F-Z & Karmokolias, Y, 1996. "International Joint Ventures in Developing Countries. Happy Marriages?," Papers 29, World Bank - International Finance Corporation.
  4. Satya P. Das, 1998. "On the choice of international joint venture: the role of policy moral hazard," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 2(2), pages 135-150.
  5. Roy Chowdhury, Indrani & Roy Chowdhury, Prabal, 2001. "A theory of joint venture life-cycles," International Journal of Industrial Organization, Elsevier, vol. 19(3-4), pages 319-343, March.
  6. Combs, K. L., 1993. "The role of information sharing in cooperative research and development," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 535-551.
  7. Ray Chaudhuri, Prabal, 1995. "Technological asymmetry and joint product development," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 23-39, March.
  8. Svejnar, Jan & Smith, Stephen C, 1984. "The Economics of Joint Ventures in Less Developed Countries," The Quarterly Journal of Economics, MIT Press, vol. 99(1), pages 149-67, February.
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Citations

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Cited by:
  1. Tai-Liang Chen & Yuanyuan Ma, 2010. "International joint venture, commitment and host-country policy in an integrated market," International Review of Economics, Springer, vol. 57(4), pages 411-421, December.
  2. Onur Koska, 2009. "Foreign Direct Investment For Sale," Working Papers 0910, University of Otago, Department of Economics, revised Oct 2009.
  3. Bilgehan Karabay & Gernot Pulverer & Ewa Weinm├╝ller, 2009. "Foreign Ownership Restrictions: A Numerical Approach," Computational Economics, Society for Computational Economics, vol. 33(4), pages 361-388, May.
  4. Zhong, Litao & Lahiri, Sajal, 2009. "International joint ventures and tax competition in an integrated market," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 38-44, January.

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