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Strategic profit sharing between firms: an apllication to joint ventures

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  • Waddle, Roberts

Abstract

Our companion article developed a clear conceptual framework of profit sharing between two rival firms and studied the effects of this strategy on each firm's profit under the assumption that each firm decides unilaterally to give away voluntarily a part of its profit to its rival. This article relaxes totally this assumption and allows firms to invest rather a fraction of their profits in a joint venture. As in the previous article, it shows how and when forming a joint venture may be a successful strategy. Furthermore and more importantly, it brings to light that joint venture may be used to conceal the profit-sharing (maybe forbidden) strategy.

Suggested Citation

  • Waddle, Roberts, 2005. "Strategic profit sharing between firms: an apllication to joint ventures," UC3M Working papers. Economics we051003, Universidad Carlos III de Madrid. Departamento de Economía.
  • Handle: RePEc:cte:werepe:we051003
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    Cited by:

    1. José Luis Ferreira & Roberts Waddle, 2010. "Strategic profit sharing between firms," International Journal of Economic Theory, The International Society for Economic Theory, vol. 6(4), pages 341-354.

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