The Pace of Technology Transfer in Anticipation of Joint Venture Breakup

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.


Issue Date:
2009
Publication Type:
Working or Discussion Paper
PURL Identifier:
http://purl.umn.edu/55329
Total Pages:
47
JEL Codes:
O3
Series Statement:
GC
102.2009




 Record created 2017-04-01, last modified 2017-08-25

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