Knowledge Transfer and Partial Equity Ownership

43 Pages Posted: 19 Mar 2012 Last revised: 22 Jul 2015

See all articles by Arghya Ghosh

Arghya Ghosh

UNSW Australia Business School, School of Economics

Hodaka Morita

Hitotsubashi University - Institute of Economic Research

Date Written: July 1, 2015

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.

Keywords: knowledge transfer, oligopoly, partial equity ownership, strategic alliances, welfare

JEL Classification: L10, L40, L50

Suggested Citation

Ghosh, Arghya and Morita, Hodaka, Knowledge Transfer and Partial Equity Ownership (July 1, 2015). Available at SSRN: https://ssrn.com/abstract=2020098 or http://dx.doi.org/10.2139/ssrn.2020098

Arghya Ghosh

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Hodaka Morita (Contact Author)

Hitotsubashi University - Institute of Economic Research ( email )

2-1 Naka Kunitachi-shi
Tokyo 186-8306
Japan

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