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Technology Transfer, Merger and Joint Venture: A Comparative Welfare Analysis


  • Kabiraj, Tarun

    () (Indian Statistical Institute)

  • Roy, Prithvijit

    (Indian Statistical Institute)


We consider a framework where initially a foreign firm and a few domestic firms are competing in a homogenous product local market. The foreign firm has a lower marginal cost of production relative to the domestic firms. We study then possibility of a bilateral agreement between the foreign firm and a local firm on each of technology transfer, merger and joint venture. Given the optimal behavior of the foreign firm, the paper also examines welfare implica - tions of each such collaborative deal. Depending on cost asymmetry it is always profitable for the foreign firm to go for the one or the other deal. But the local government generally encourages new firm joint venture formation. The degree of cost asymmetry and the number of firms in the market play an impor - tant role in this analysis.

Suggested Citation

  • Kabiraj, Tarun & Roy, Prithvijit, 1999. "Technology Transfer, Merger and Joint Venture: A Comparative Welfare Analysis," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 14, pages 442-466.
  • Handle: RePEc:ris:integr:0113

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    References listed on IDEAS

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    Cited by:

    1. Mukherjee, Arijit & Balasubramanian, N., 2001. "Technology transfer in a horizontally differentiated product market," Research in Economics, Elsevier, vol. 55(3), pages 257-274, September.
    2. Tarun Kabiraj & Arijit Mukherjee, 2000. "Cooperation in R&D and production: a three-firm analysis," Journal of Economics, Springer, vol. 71(3), pages 281-304, October.
    3. Mattoo, Aaditya & Olarreaga, Marcelo & Saggi, Kamal, 2004. "Mode of foreign entry, technology transfer, and FDI policy," Journal of Development Economics, Elsevier, vol. 75(1), pages 95-111, October.
    4. repec:eee:reveco:v:51:y:2017:i:c:p:455-469 is not listed on IDEAS
    5. Beladi, Hamid & Mukherjee, Arijit, 2012. "Footloose foreign firm and profitable domestic merger," Journal of Economic Behavior & Organization, Elsevier, vol. 83(2), pages 186-194.
    6. repec:ebl:ecbull:v:6:y:2006:i:16:p:1-8 is not listed on IDEAS
    7. Mattoo, Aaditya & Olarreaga, Marcelo & Saggi, Kamal, 2001. "Mode of foreign entry, technology transfer, and foreign direct investment policy," Policy Research Working Paper Series 2737, The World Bank.
    8. Arijit Mukherjee, 2006. "Cross-border merger and domestic welfare," Economics Bulletin, AccessEcon, vol. 6(16), pages 1-8.
    9. Mikhail Klimenko & Kamal Saggi, 2004. "Technical Compatibility and the Mode of Foreign Entry under Network Externalities," Working Papers 04-05, NET Institute, revised Oct 2004.

    More about this item


    technology transfer; merger; joint venture;

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets


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