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Knowledge Transfer and Partial Equity Ownership

Author

Listed:
  • Arghya Ghosh

    (School of Economics, The University of New South Wales)

  • Hodaka Morita

    (School of Economics, The University of New South Wales)

Abstract

When firms form an alliance, it often involves one firm acquiring an equity stake in its alliance partner. Such an alliance weakens competition, but induces knowledge transfer between partner firms. We explore oligopoly models that capture the link between knowledge transfer and partial equity ownership (PEO), where alliance partners can choose the level of PEO to connect themselves. PEO, merger and independence are all nested in our model, where PEO can arise in equilibrium and the endogenously determined level of PEO can benefit consumers and/or society. We identify conditions under which antitrust authorities would prohibit, partially permit, or permit PEO.

Suggested Citation

  • Arghya Ghosh & Hodaka Morita, 2012. "Knowledge Transfer and Partial Equity Ownership," Discussion Papers 2012-18, School of Economics, The University of New South Wales.
    • Handle: RePEc:swe:wpaper:2012-18
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Antitrust; knowledge transfer; oligopoly; partial equity ownership; strategic alliances; welfare.;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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