Joint Venture Instability Under Entry

University of Nottingham Research Paper No. 2006/47

24 Pages Posted: 17 Dec 2006

See all articles by Shantanu Banerjee

Shantanu Banerjee

Lancaster University - Management School

Arijit Mukherjee

University of Nottingham - School of Economics

Date Written: 2006

Abstract

Many developing countries are liberalizing their economies to allow higher equity participation by the foreign firms. We argue that the possibility of joint venture can reduce the number of technology transfers. Hence, joint venture can reduce the welfare of a host-country by creating higher market-concentration. However, higher profit generation under joint venture encourages the foreign firm to transfer relatively better technology and may make the host-country and the firms better-off under joint venture than licensing. For sufficiently large efficiency-gain, the host-country allows fully owned subsidiary of the foreign firm.

Keywords: Joint venture, Licensing, Welfare

JEL Classification: F21, F23

Suggested Citation

Banerjee, Shantanu and Mukherjee, Arijit, Joint Venture Instability Under Entry (2006). University of Nottingham Research Paper No. 2006/47, Available at SSRN: https://ssrn.com/abstract=951981 or http://dx.doi.org/10.2139/ssrn.951981

Shantanu Banerjee (Contact Author)

Lancaster University - Management School ( email )

Lancaster, Lancashire LA1 4YX
United Kingdom

Arijit Mukherjee

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom
+44 115 9514733 (Phone)
+44 115 9514159 (Fax)

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