Strategic Profit Sharing Between Firms: An Apllication To Joint Ventures
AbstractOur companion article developed a clear conceptual framework of profit sharing between two rival firms and studied the effects of this strategy on each firm's profit under the assumption that each firm decides unilaterally to give away voluntarily a part of its profit to its rival. This article relaxes totally this assumption and allows firms to invest rather a fraction of their profits in a joint venture. As in the previous article, it shows how and when forming a joint venture may be a successful strategy. Furthermore and more importantly, it brings to light that joint venture may be used to conceal the profit-sharing (maybe forbidden) strategy.
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Bibliographic InfoPaper provided by Universidad Carlos III, Departamento de Economía in its series Economics Working Papers with number we051003.
Date of creation: Feb 2005
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ACC-2005-03-06 (Accounting & Auditing)
- NEP-ALL-2005-03-06 (All new papers)
- NEP-BEC-2005-03-06 (Business Economics)
- NEP-IND-2005-03-06 (Industrial Organization)
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