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International Joint Ventures: A Welfare Analysis

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  • Indrani Roy Chowdhury
  • Prabla Chowdhury

Abstract

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.

Suggested Citation

  • Indrani Roy Chowdhury & Prabla Chowdhury, 2002. "International Joint Ventures: A Welfare Analysis," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 5(1), pages 51-60.
    • Handle: RePEc:taf:jpolrf:v:5:y:2002:i:1:p:51-60
    DOI: 10.1080/13841280212384
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    References listed on IDEAS

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    1. Ray Chaudhuri, Prabal, 1995. "Technological asymmetry and joint product development," International Journal of Industrial Organization, Elsevier, vol. 13(1), pages 23-39, March.
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    6. 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.
    7. Choi, Jay Pil, 1993. "Cooperative R&D with product market competition," International Journal of Industrial Organization, Elsevier, vol. 11(4), pages 553-571.
    8. Satya P. Das, 1998. "On the choice of international joint venture: the role of policy moral hazard," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 2(2), pages 135-150.
    9. Chan, Raissa & Hoy, Michael, 1991. "East--West joint ventures and buyback contracts," Journal of International Economics, Elsevier, vol. 30(3-4), pages 331-343, May.
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    Cited by:

    1. Bilgehan Karabay & Gernot Pulverer & Ewa Weinmüller, 2009. "Foreign Ownership Restrictions: A Numerical Approach," Computational Economics, Springer;Society for Computational Economics, vol. 33(4), pages 361-388, May.
    2. Tai-Liang Chen & Yuanyuan Ma, 2010. "International joint venture, commitment and host-country policy in an integrated market," International Review of Economics, Springer;Happiness Economics and Interpersonal Relations (HEIRS), vol. 57(4), pages 411-421, December.
    3. Onur Koska, 2009. "Foreign Direct Investment For Sale," Working Papers 0910, University of Otago, Department of Economics, revised Oct 2009.
    4. Zou, Yuxiang & Chen, Tai-Liang, 2016. "International joint venture and welfare-improving tariff-tax reforms," International Review of Economics & Finance, Elsevier, vol. 46(C), pages 27-35.
    5. Zhong, Litao & Lahiri, Sajal, 2009. "International joint ventures and tax competition in an integrated market," International Review of Economics & Finance, Elsevier, vol. 18(1), pages 38-44, January.

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