IDEAS home Printed from https://ideas.repec.org/p/toh/tupdaa/66.html
   My bibliography  Save this paper

Cross-border Partial Equity Ownership

Author

Listed:
  • Tomohiro Ara
  • Arghya Ghosh
  • Hodaka Morita
  • Hiroshi Mukunoki

Abstract

Firms often form a cross-border alliance by partially owning the equity. When and why do firms have cross-border partial equity ownership (PEO)? Under which conditions should a government give approval for firms to form such PEO? To address the questions, this paper develops an international oligopoly model where one foreign firm forms cross-border PEO with one home firm. PEO helps firms adjust production by avoiding trade costs but decreases market competition inducing a rival firm to take aggressive actions. We find that when cost differences between cross-border alliance firms are moderate, they choose PEO in order to shift the output between them most effectively while alleviating a rival firm's aggressive actions. However, a government should ban this PEO from the viewpoint of welfare, since the negative effect of weakened competition dominates the positive effect of output shifting: only when cost differences are large, should a government approve cross-border PEO.

Suggested Citation

  • Tomohiro Ara & Arghya Ghosh & Hodaka Morita & Hiroshi Mukunoki, 2025. "Cross-border Partial Equity Ownership," TUPD Discussion Papers 66, Graduate School of Economics and Management, Tohoku University.
    • Handle: RePEc:toh:tupdaa:66
    as

    Download full text from publisher

    File URL: https://hdl.handle.net/10097/0002003551
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:toh:tupdaa:66. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Tohoku University Library (email available below). General contact details of provider: https://edirc.repec.org/data/fetohjp.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.