Optimal ownership in joint ventures with contributions of asymmetric partners

This paper faces two questions concerning Joint Ventures (JV) agreements. First, we study how the partners contribution affect the creation and the profit sharing of a JV when partners' effort is not observable. Then, we see whether such agreements are easier to enforce when the decision on JV profit sharing among partners is either delegated to the independent JV management (Management Sharing) or jointly taken by partners (Coordinated Sharing). We find that the firm whose effort has a higher impact on the JV's profits should have a larger profit shares. Moreover, a Management sharing ensures, at least in some cases, a wider range of self-enforceable JV agreements.

[1]  P. Lin,et al.  Ownership Structure and Technological Upgrading in International Joint Ventures , 2004 .

[2]  Laurence A. Wolsey,et al.  Production Planning by Mixed Integer Programming , 2010 .

[3]  Hadi Salehi Esfahani,et al.  Ownership Structure in Foreign Direct Investment Projects , 1998, Review of Economics and Statistics.

[4]  P. Pestieau.  The Welfare State in the European Union: Economic and Social Perspectives , 2006 .

[5]  Yves Smeers,et al.  Evaluating the impact of average cost based contracts on the industrial sector in the European emission trading scheme , 2007 .

[6]  Filomena Garcia,et al.  Compatibility Choice in vertically differentiated technologies , 2008 .

[7]  A. Gillison,et al.  Research Partnerships , 2007 .

[8]  John-John D’Argensio,et al.  The Real Estate Risk Premium: A Developed/Emerging Country Panel Data Analysis , 2009, The Journal of Portfolio Management.

[9]  L. Bauwens,et al.  The Resistible Decline of European Science , 2008 .

[10]  L. Eeckhoudt,et al.  A benchmark value for relative prudence. , 2007 .

[11]  Pierre Dehez,et al.  Shapley Compensation Scheme , 2007 .

[12]  Jean-Charles Régin,et al.  Integration of AI and OR Techniques in Constraint Programming for Combinatorial Optimization Problems , 2004, Lecture Notes in Computer Science.

[13]  W. Pohlmeier,et al.  High frequency financial econometrics : recent developments , 2007 .

[14]  Jean-François Maystadt.  Does inequality make us rebel ? A renewed theoretical model applied to South Mexico , 2007 .

[15]  Giuseppe De Feo.  Efficiency gains and mergers , 2008 .

[16]  P. Pestieau,et al.  Collective annuities and redistribution , 2010 .

[17]  Milind M. Shrikhande,et al.  Structuring International Cooperative Ventures , 2002 .

[18]  W. Vergote,et al.  On the Role of Retaliation in Trade Agreements , 2004 .

[19]  Juan D. Moreno-Ternero,et al.  Interdependent preferences in the design of equal-opportunity policies , 2008 .

[20]  Gabriella Muratore,et al.  Equilibria in markets with non-convexities and a solution to the missing money phenomenon in energy markets , 2008 .

[21]  Nejat Anbarcı,et al.  Inter-firm complementarities in R&D: a re-examination of the relative performance of joint ventures , 2002 .

[22]  Reinhilde Veugelers,et al.  Bargained shares in joint ventures among asymmetric partners: Is the matthew effect catalyzing? , 1996 .

[23]  Gaetano Bloise,et al.  A Characterization of Inefficiency in Stochastic Overlapping Generations Economies , 2008, J. Econ. Theory.

[24]  L. Eeckhoudt,et al.  On the intensity of downside risk aversion , 2008 .

[25]  Pierre Pestieau,et al.  Social protection performance in the European Union:comparison and convergence , 2008 .

[26]  Yves Pochet,et al.  Valid inequalities for the single-item capacitated lot sizing problem with step-wise costs , 2009, Eur. J. Oper. Res..

[27]  V. Ginsburgh,et al.  Handbook of the Economics of the Art and Culture , 2006 .

[28]  Pierre Pestieau,et al.  Forced Saving, Redistribution and Nonlinear Social Security Schemes , 2008 .

[29]  J. Florens,et al.  IDENTIFICATION AND ESTIMATION BY PENALIZATION IN NONPARAMETRIC INSTRUMENTAL REGRESSION , 2010, Econometric Theory.

[30]  Andréas Heinen,et al.  Modeling International Financial Returns with a Multivariate Regime Switching Copula , 2008 .

[31]  Juan D. Moreno-Ternero,et al.  Axiomatic resource allocation for heterogeneous agents , 2008 .

[32]  Tanguy Isaac,et al.  Information revelation in markets with pairwise meetings: complete information revelation in dynamic analysis , 2008 .

[33]  Masao Nakamura,et al.  On the determinants of foreign ownership shares: Evidence from US firms' joint ventures in Japan , 1994 .

[34]  Kathryn Gordon,et al.  DIRECTORATE FOR FINANCIAL, FISCAL AND ENTERPRISE AFFAIRS , 2001 .

[35]  Sanford J. Grossman,et al.  The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration , 1986 .

[36]  A. Silvestrini.  Testing fiscal sustainability in Poland: a Bayesian analysis of cointegration , 2010 .

[37]  John A. Aloysius.  Research joint ventures: A cooperative game for competitors , 2002, Eur. J. Oper. Res..

[38]  Jean-Philippe Vial,et al.  A partitioning algorithm for the network loading problem , 2010, Eur. J. Oper. Res..

[39]  A. Muthoo.  Bargaining Theory with Applications , 1999 .

[40]  Carlo Capuano,et al.  Mixed Duopoly, Privatization and the Shadow Cost of Public Funds , 2008 .

[41]  Laurence A. Wolsey,et al.  Integration of AI and OR Techniques in Constraint Programming for Combinatorial Optimization Problems, 4th International Conference, CPAIOR 2007, Brussels, Belgium, May 23-26, 2007, Proceedings , 2007, CPAIOR.

[42]  Yves Smeers,et al.  Gas models and three difficult objectives , 2008 .

[43]  A. Jacquemin,et al.  Cooperative and Noncooperative R&D in Duopoly with Spillovers , 1988 .

[44]  Marco Marinucci.  Optimal ownership in joint ventures with contributions of asymmetric partners , 2009 .

[45]  James Renegar,et al.  A mathematical view of interior-point methods in convex optimization , 2001, MPS-SIAM series on optimization.

[46]  M. Darrough,et al.  A Bargaining Approach to Profit Sharing in Joint Ventures , 1989 .

[47]  Wouter Vergote,et al.  Von Neumann-Morgenstern Farsightedly Stable Sets in Two-Sided Matching , 2008 .

[48]  Paul W. Beamish,et al.  Performance and Survival of Joint Ventures with Non-Conventional Ownership Structures , 1998 .

[49]  Jeroen V. K. Rombouts,et al.  Mixed Exponential Power Asymmetric Conditional Heteroskedasticity , 2007 .

[50]  Nicholas Vonortas,et al.  Research Joint Ventures , 2003 .

[51]  Satya P. Das,et al.  Host-country policy, transfer pricing and ownership distribution in international joint ventures: A theoretical analysis , 1996 .

[52]  Erik Schokkaert,et al.  Unfair inequalities in health and health care. , 2009, Journal of health economics.

[53]  Francine Lafontaine,et al.  Double-Sided Moral Hazard and the Nature of Share Contracts , 1995 .

[54]  Wlodzimierz Szwarc.  On cycling in the simplex method of the transportation problem , 2009 .

[55]  J. Drèze,et al.  Public goods, environmental externalities and fiscal competition , 2006 .

[56]  Michelle Sovinsky,et al.  Do Research Joint Ventures Serve a Collusive Function? , 2019, Journal of the European Economic Association.

[57]  Jean-Christophe Van den Schrieck,et al.  Approximating multiple class queueing models with loss models , 2008 .

[58]  Yves Smeers,et al.  Energy only, capacity market and security of supply. A stochastic equilibrium analysis , 2008 .

[59]  Christian Gourieroux,et al.  Simulation-based econometric methods , 1996 .

[60]  Lorán Chollete,et al.  Modeling International Financial Returns with a Multivariate Regime-switching Copula , 2009 .

[61]  Masao Nakamura.  Joint venture instability, learning and the relative bargaining power of the parent firms , 2005 .

[62]  Pierre Pestieau,et al.  Prodigality and Myopia - Two Rationales for Social Security , 2008 .

[63]  L. L. Blodgett.  Partner Contributions as Predictors of Equity Share in International Joint Ventures , 1991 .

[64]  J. Drèze,et al.  Shareholder-efficient production plans in a multi-period economy , 2007 .

[65]  O. Hart,et al.  Property Rights and the Nature of the Firm , 1988, Journal of Political Economy.

[66]  Yves Pochet,et al.  An integrated model for warehouse and inventory planning , 2010, Eur. J. Oper. Res..

[67]  J. Gabszewicz.  La différenciation des produits , 2006 .

[68]  Daniel Bienstock,et al.  Potential Function Methods for Approximately Solving Linear Programming Problems: Theory and Practice , 2002 .