The paper studies the performance of joint ventures where upstreams firms sell inputs to a production joint venture. It is found that joint ventures lead to overinvoicing of input prices (tranfer prices) compared to integrated firms resulting in lower aggregate profits. Tax and tariff policy may improve the organizational inefficiencies of joint ventures. The analysis suggests that firms must have other reasons for forming joint ventures than those guided by production efficiency and benefits from delegation of decision-making.
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Publisher Info
Paper provided by Norwegian School of Economics and Business Administration- in its series Papers with number
10/98.
Length: 27 pages Date of creation: 1998 Date of revision: Handle: RePEc:fth:norgee:10/98
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