Under-provision of Inputs in Joint Ventures with Market Power

Ping Lin and Kamal Saggi ()

Bulletin of Economic Research, 2002, vol. 54, issue 2, 189-96

Abstract: A joint venture with market power benefits from restricting its output which, in turn, requires the partners to restrict the supply of their inputs. However, since each partner benefits only partially from restricting its input, both over-supply their inputs from the viewpoint of the optimal use of market power. We show that this pecuniary negative externality in the partners' input decisions mitigates the standard under-provision problem that arises in joint ventures. We also show that the degree of this problem declines as demand becomes less elastic. Copyright 2002 by Blackwell Publishing Ltd and the Board of Trustees of the Bulletin of Economic Research

Date: 2002
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:buecrs:v:54:y:2002:i:2:p:189-96

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0307-3378

Access Statistics for this article

More articles in Bulletin of Economic Research from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().