Technology Transfer, Merger and Joint Venture: A Comparative Welfare Analysis

Tarun Kabiraj and Prithvijit Roy
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Prithvijit Roy: Indian Statistical Institute, Postal: Economic Research Unit, Indian Statistical, Institute, 203 B. T. Road, Calcutta 700 035, India

Journal of Economic Integration, 1999, vol. 14, 442-466

Abstract:

We consider a framework where initially a foreign firm and a few domestic firms are competing in a homogenous product local market. The foreign firm has a lower marginal cost of production relative to the domestic firms. We study then possibility of a bilateral agreement between the foreign firm and a local firm on each of technology transfer, merger and joint venture. Given the optimal behavior of the foreign firm, the paper also examines welfare implica - tions of each such collaborative deal. Depending on cost asymmetry it is always profitable for the foreign firm to go for the one or the other deal. But the local government generally encourages new firm joint venture formation. The degree of cost asymmetry and the number of firms in the market play an impor - tant role in this analysis.

Keywords: technology transfer; merger; joint venture (search for similar items in EconPapers)
JEL-codes: D43 F23 L13 (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (13)

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Persistent link: https://EconPapers.repec.org/RePEc:ris:integr:0113

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