International joint ventures and endogenous protection a political-economy approach

Laixun Zhao

ビジネス創造センターディスカッション・ペーパー (Discussion papers of the Center for Business Creation) from Otaru University of Commerce

Abstract: This paper constructs a model of international joint ventures (JVs) with political-economy considerations as the main motivation. A foreign firm decides whether to undertake full ownership foreign direct investment (FDI), or to form a JV with a home firm, while the home firm lobbies against foreign imports. It is shown that the formation of a JV is the equilibrium under certain conditions. If the foreign firm anticipates future protectionist threats and forms a JV with the home firm beforehand (quid pro quo JV), then the foreign firm's profit increases and the home firm's level of lobby decreases.

Pages: 19 pages
Date: 1995-11
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Published in Discussion paper series (1995), 19: 1-19

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Journal Article: International Joint Ventures and Endogenous Protection: A Political-Economy Approach (1997)
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Persistent link: https://EconPapers.repec.org/RePEc:ota:busdis:10252/4192

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