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The Pace of Technology Transfer in Anticipation of Joint Venture Breakup

Ngo Long, Antoine Soubeyran and Raphael Soubeyran ()

No 55329, Global Challenges Papers from Fondazione Eni Enrico Mattei (FEEM)

Abstract: This paper studies the properties of joint-venture relationship between a technologically advanced multinational firm and a local firm operating in a developing economy where the ability to enforce contracts is weak. We formulate a dynamic model of principal-agent relationship in which at any point of time the local firm can quit without legal penalties. An early breakup may be prevented if the multinational designs a suitable scheme in which both the pace and aggregate amount of technology transfer deviate from the first-best, and a suitable flow of side payments to encourage the local firm to stay longer.

Keywords: Research; and; Development/Tech; Change/Emerging; Technologies (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:ags:feemgc:55329

DOI: 10.22004/ag.econ.55329

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