International Joint Ventures: A Welfare Analysis
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.
Volume (Year): 5 (2002)
Issue (Month): 1 ()
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