High-Cost Domestic Joint Ventures and International Competition: Do Domestic Firms Gain?

Ruth R. Raubitschek and Barbara Spencer

No 4804, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper develops the idea that when markets are imperfectly competitive, final producers may gain from a joint venture that produces part of their input requirements even though marginal cost exceeds the input's market price. Production by the joint venture lowers the market price of the input and this can raise profits sufficiently from final product sales to make the joint venture worthwhile. Also, use of a joint venture internalizes the positive externality from a lower input price. These results are motivated by a setting in which domestic firms are dependent on foreign oligopolistic suppliers for a key input.

JEL-codes: F12 L22 (search for similar items in EconPapers)
Date: 1994-07
Note: ITI
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Published as International Economic Review, Vol. 37, No. 2 (May 1996): 315-340.

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Journal Article: High-Cost Domestic Joint Ventures and International Competition: Do Domestic Firms Gain? (1996)
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