Permalink : http://hdl.handle.net/2115/5401

KEYWORDS : Nash Bargaining;Cournot Duopoly;Firms' Behavior

This paper analyzes the negotiation for ownership share of an international joint venture. We use Nash Bargaining to determine ownership and specify firms' behavior at the disagreement point: if the negotiation fails, the market becomes a Cournot duopoly. We show that all exogenous parameters have some effect on the equilibrium ownership share; even parameters that have no effect on the joint venture's production have an effect on the ownership share because they change the participating firms' bargaining positions. It is also shown that an increase in fixed cost may increase or decrease the ownership share depending on the initial bargaining positions. (JEL Classifi-cation: L24)