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Optimal Duration Of Equity Joint Ventures

Author

Listed:
  • David Mayston
  • Juning Wang

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.

Suggested Citation

  • David Mayston & Juning Wang, 2012. "Optimal Duration Of Equity Joint Ventures," Discussion Papers 12/09, Department of Economics, University of York.
    • Handle: RePEc:yor:yorken:12/09
    as

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    References listed on IDEAS

    as
    1. Bronwyn H. Hall & Nathan Rosenberg (ed.), 2010. "Handbook of the Economics of Innovation," Handbook of the Economics of Innovation, Elsevier, edition 1, volume 1, number 1.
    2. Kogut, Bruce, 1989. "The Stability of Joint Ventures: Reciprocity and Competitive Rivalry," Journal of Industrial Economics, Wiley Blackwell, vol. 38(2), pages 183-198, December.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Joint ventures; equity shareholdings; optimal duration; knowledge transfer; corporate tax rates.;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • M29 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Other
    • O39 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Other
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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