International joint venture: Buy-out and subsidiary
This paper deals with the issue of instability of joint ventures in the context of international investment. In an adverse selection framework, we show (a) the partial share adjustment of a joint venture by a multinational corporation (MNC) and (b) the possibility of setting up a subsidiary by the MNC to compete with its existing joint venture counterpart. In our principal agent framework of buy-out, we find an interesting implication that under certain parameter configurations, the principal (MNC) prefers to offer a pooling contract as opposed to a separating contract, thereby deciding not to acquire the agent's true private information.
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Kogut, Bruce, 1989. "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 183-98, December.
- Aimin Yan & Ming Zeng, 1999. "International Joint Venture Instability: A Critique of Previous Research, A Reconceptualization, and Directions for Future Research," Journal of International Business Studies, Palgrave Macmillan, vol. 30(2), pages 397-414, June.
- Gjesdal, Froystein, 1982. "Information and Incentives: The Agency Information Problem," Review of Economic Studies, Wiley Blackwell, vol. 49(3), pages 373-90, July.
- Lerner, Josh & Merges, Robert P, 1998. "The Control of Technology Alliances: An Empirical Analysis of the Biotechnology Industry," Journal of Industrial Economics, Wiley Blackwell, vol. 46(2), pages 125-56, June.
- Bruce Kogut, 1991. "Joint Ventures and the Option to Expand and Acquire," Management Science, INFORMS, vol. 37(1), pages 19-33, January.
- Salant, Stephen W & Switzer, Sheldon & Reynolds, Robert J, 1983. "Losses from Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, MIT Press, vol. 98(2), pages 185-99, May.
- Das, Satya P, 1999. "Direct Foreign Investment versus Licensing," Review of Development Economics, Wiley Blackwell, vol. 3(1), pages 86-97, February.
- Farok J Contractor, 1990. "Ownership Patterns of U.S. Joint Ventures Abroad and the Liberalization of Foreign Government Regulations in the 1980s: Evidence from the Benchmark Surveys," Journal of International Business Studies, Palgrave Macmillan, vol. 21(1), pages 55-73, March.
- Lee, Insup & Wyatt, Steve B, 1990. "The Effects of International Joint Ventures on Shareholder Wealth," The Financial Review, Eastern Finance Association, vol. 25(4), pages 641-49, November.
- Gilbert, Richard J & Newbery, David M, 1992. "Alternative Entry Paths: The Build or Buy Decision," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 1(1), pages 129-50, Spring.
- Morton I. Kamien & Israel Zang, 1987.
"The Limits of Monopolization Through Acquisition,"
754, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Tailan Chi & Donald J McGuire, 1996. "Collaborative Ventures and Value of Learning: Integrating the Transaction Cost and Strategic Option Perspectives on the Choice of Market Entry Modes," Journal of International Business Studies, Palgrave Macmillan, vol. 27(2), pages 285-307, June.
- Sugata Marjit & Arijit Mukherjee, 2001. "Technology Transfer under Asymmetric Information: The Role of Equity Participation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(2), pages 282-, June.
- Balakrishnan, Srinivasan & Koza, Mitchell P., 1993. "Information asymmetry, adverse selection and joint-ventures : Theory and evidence," Journal of Economic Behavior & Organization, Elsevier, vol. 20(1), pages 99-117, January.
- Caillaud, Bernard, 1990. "Regulation, competition, and asymmetric information," Journal of Economic Theory, Elsevier, vol. 52(1), pages 87-110, October.
- Sinha, Uday Bhanu, 2001. "International joint venture, licensing and buy-out under asymmetric information," Journal of Development Economics, Elsevier, vol. 66(1), pages 127-151, October.
- Aimin Yan, 1998. "Structural Stability and Reconfiguration of International Joint Ventures," Journal of International Business Studies, Palgrave Macmillan, vol. 29(4), pages 773-795, December.
- Marjit, Sugata, 1990.
"Rationalizing public-private joint ventures in an open economy : A strategic approach,"
Journal of Development Economics,
Elsevier, vol. 33(2), pages 377-383, October.
- Marjit, S., 1988. "Rationalizing Public-Private Joint Ventures In An Open Economy: A Strategic Approach," Papers 88-1, Florida - College of Business Administration.
- 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.
- Arvind Parkhe, 1991. "Interfirm Diversity, Organizational Learning, and Longevity in Global Strategic Alliances," Journal of International Business Studies, Palgrave Macmillan, vol. 22(4), pages 579-601, December.
- David P. Baron & Roger B. Myerson, 1979.
"Regulating a Monopolist with Unknown Costs,"
412, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Singh, Nirvikar, 1985. "Monitoring and Hierarchies: The Marginal Value of Information in a Principal-Agent Model," Journal of Political Economy, University of Chicago Press, vol. 93(3), pages 599-609, June.
- Lewis, Tracy R. & Sappington, David E. M., 1989. "Countervailing incentives in agency problems," Journal of Economic Theory, Elsevier, vol. 49(2), pages 294-313, December.
- Caves, Richard E, 1971. "International Corporations: The Industrial Economics of Foreign Investment," Economica, London School of Economics and Political Science, vol. 38(149), pages 1-27, February.
When requesting a correction, please mention this item's handle: RePEc:eee:jeborg:v:65:y:2008:i:3-4:p:734-756. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.