A theory of joint venture life-cycles

• DOI: 10.1016/s0167-7187(99)00014-4
• Publication Date: 2002-07-25T16:57:15Z
• Authors: Indrani Roy Chowd...; Prabal Roy Chowdhury
• Keywords: Moral hazard

Abstract In this paper we provide a dynamic theory of joint venture life cycle that relies on synergy, organisational learning and moral hazard. We demonstrate that depending on parameter values the outcome may involve any one of the following: stable joint venture formation, joint venture formation followed by breakdown, or Cournot competition in all the periods. We also provide some interesting welfare results.