OPTIMAL DURATION OF EQUITY JOINT VENTURES

David Mayston () and Juning Wang

Discussion Papers from Department of Economics, University of York

Abstract: Rather than being a random unpredictable event, the break-up of an equity joint venture after a finite time can be modelled as the predictable consequence of underlying economic parameters under conditions of complete certainty. The paper examines the impact of a range of important economic parameters on the optimal duration of an equity joint venture, including the degree of economies of scale and knowledge transfer, and discusses the associated interface with relevant empirical evidence and analysis. It also highlights the policy implications of the analysis for the socially optimal corporate tax rate on the joint venture that aligns the privately optimal duration of the joint venture with its social optimum.

Keywords: Joint ventures; equity shareholdings; optimal duration; knowledge transfer; corporate tax rates. (search for similar items in EconPapers)
JEL-codes: H21 L24 L52 M29 O39 (search for similar items in EconPapers)
Date: 2012-03
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Working Paper: The Optimal Duration of Equity Joint Ventures
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:12/09

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