Firm Size, Synergy and Joint Ventures

Indrani Roy Chowdhury ; Prabal Roy Chowdhury

Ph.D Student, ITDD, CSDILE, School of International Studies, Jawaharlal Nehru University, New Delhi 110067, INDIA, Tel: +91-11-6181160 indranirc@hotmail.com
Associate Professor, ITDD, CSDILE, School of Inter- national Studies, Jawaharlal Nehru University, New Delhi 110067, INDIA, Tel: +91-11-6107676 (Ext. 2403) prabalrc@hotmail.com

JEL Classification: F23, L13

Abstract

We develop a synergy based theory of joint venture formation. We find that an increase in firm size affects the incentive for joint venture formation. Furthermore, firm size also crucially affects the impact of market size on the incentive for joint venture formation. We also perform some interesting welfare analysis.

Acknowledgments

We are indebted to an anonymous referee of this journal for very helpful comments. The responsibility for any errors that remain are, of course, ours alone.

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