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Technology Transfer under Asymmetric Information: The Role of Equity Participation

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  • Sugata Marjit
  • Arijit Mukherjee

Abstract

Technological collaboration coupled with equity participation improves the quality of transacted technology relative to a situation characterised by a pure technology licensing agreement. Such a result is proved in a model of a signalling game with asymmetric information and threat of imitation. Different contractual arrangements involving equity participation with or without up-front fixed fee and/or output-based royalty payments are discussed.

Suggested Citation

  • Sugata Marjit & Arijit Mukherjee, 2001. "Technology Transfer under Asymmetric Information: The Role of Equity Participation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 157(2), pages 282-300, June.
    • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200106)157:2_282:ttuait_2.0.tx_2-x
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    References listed on IDEAS

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    1. Sugato Bhattacharyya & Francine Lafontaine, 1995. "Double-Sided Moral Hazard and the Nature of Share Contracts," RAND Journal of Economics, The RAND Corporation, vol. 26(4), pages 761-781, Winter.
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    Cited by:

    1. Arijit Mukherjee & Udo Broll, 2007. "Welfare Effects of Foreign Direct Investment: Cost Saving vs. Signaling," Journal of Economics, Springer, vol. 90(1), pages 29-43, January.
    2. Pedro Mendi & Rafael Moner-Colonques & José J. Sempere-Monerris, 2016. "Optimal know-how transfers in licensing contracts," Journal of Economics, Springer, vol. 118(2), pages 121-139, June.
    3. Jung Eun Lee & Younghoon Kim & Yeonbae Kim & Donghyuk Choi, 2010. "The Impact of Technology Licensing Payment Mechanisms on Firms' Innovative Performance," TEMEP Discussion Papers 201071, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Dec 2010.
    4. Kabiraj, Tarun & Sengupta, Sarbajit, 2018. "A theory of joint venture instability under inter-partner learning," Research in International Business and Finance, Elsevier, vol. 46(C), pages 363-372.
    5. Chen, Hung-Yi & Yang, Ya-Po & Hu, Jin-Li, 2023. "Environmental taxes under mixed duopoly: The roles of privatization and foreign eco-technology," Economic Modelling, Elsevier, vol. 126(C).
    6. Marjit, Sugata & Mukherjee, Arijit & Kabiraj, Tarun, 2004. "Future technology, incomplete information and international joint venture," Research in Economics, Elsevier, vol. 58(3), pages 219-234, September.
    7. Beladi, Hamid & Chakrabarti, Avik, 2008. "Foreign equity participation under incomplete information," Journal of Economic Behavior & Organization, Elsevier, vol. 67(1), pages 279-295, July.
    8. Bandyopadhyay, Siddhartha, 2013. "Market thickness, prices and honesty: A quality demand trap," Mathematical Social Sciences, Elsevier, vol. 65(1), pages 52-59.
    9. Sinha, Uday Bhanu, 2008. "International joint venture: Buy-out and subsidiary," Journal of Economic Behavior & Organization, Elsevier, vol. 65(3-4), pages 734-756, March.
    10. Shuai Niu, 2015. "Privatization in the presence of patent licensing," Journal of Economics, Springer, vol. 116(2), pages 151-163, October.

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    More about this item

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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