Date of This Version
December 2009
Abstract
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.
Recommended Citation
Soubeyran, Raphael; Van Long, Ngo; and Soubeyran, Antoine, "The Pace of Technology Transfer in Anticipation of Joint Venture Breakup" (December 01, 2009). Fondazione Eni Enrico Mattei Working Papers. Paper 363.
https://services.bepress.com/feem/paper363