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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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    File URL: http://research.economics.unsw.edu.au/RePEc/papers/2012-18.pdf
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    References listed on IDEAS

    as
    1. Malueg, David A., 1992. "Collusive behavior and partial ownership of rivals," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 27-34, March.
    2. Stephen W. Salant & Sheldon Switzer & Robert J. Reynolds, 1983. "Losses From Horizontal Merger: The Effects of an Exogenous Change in Industry Structure on Cournot-Nash Equilibrium," The Quarterly Journal of Economics, Oxford University Press, vol. 98(2), pages 185-199.
    3. Anthony Creane & Hideo Konishi, 2009. "Goldilocks and the Licensing Firm: Choosing a Partner when Rivals are Heterogeneous," Boston College Working Papers in Economics 720, Boston College Department of Economics.
    4. Hiroshi Ono & Takuya Nakazato & Colin Davis & Wilson Alley, 2004. "Partial ownership arrangements in the Japanese automobile industry; 1990-2000," Journal of Applied Economics, Universidad del CEMA, vol. 7, pages 355-367, November.
    5. repec:rje:randje:v:37:y:2006:1:p:81-99 is not listed on IDEAS
    6. Kabiraj, Tarun & Marjit, Sugata, 1993. "International technology transfer under potential threat of entry : A Cournot-Nash framework," Journal of Development Economics, Elsevier, vol. 42(1), pages 75-88, October.
    7. Andrew C. Inkpen & Adva Dinur, 1998. "Knowledge Management Processes and International Joint Ventures," Organization Science, INFORMS, vol. 9(4), pages 454-468, August.
    8. Joseph Farrell & Carl Shapiro, 1990. "Asset Ownership and Market Structure in Oligopoly," RAND Journal of Economics, The RAND Corporation, vol. 21(2), pages 275-292, Summer.
    9. McAfee, R Preston & Williams, Michael A, 1992. "Horizontal Mergers and Antitrust Policy," Journal of Industrial Economics, Wiley Blackwell, vol. 40(2), pages 181-187, June.
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    Cited by:

    1. Shohei Yoshida & Cong Pan, 2015. "Technology Transfer in the Market with Heterogeneous Consumers," ISER Discussion Paper 0953, Institute of Social and Economic Research, Osaka University.
    2. Fanti, Luciano, 2016. "Social welfare and cross-ownership in a vertical industry: When the mode of competition matters for antitrust policy," Japan and the World Economy, Elsevier, vol. 37, pages 8-16.
    3. Shohei Yoshida, 2015. "Multiproduct competition in vertically related industries," ISER Discussion Paper 0935, Institute of Social and Economic Research, Osaka University.

    More about this item

    Keywords

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

    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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