اندازه کشور و سیاست مالیاتی برای قرارداد جوینت ونچر بین المللی در یک بازار یکپارچه

We investigate international joint ventures in an integrated market using a two-country model with asymmetric sizes. We show that although the domestic firm in the small country is less efficient, it is possible that the government of the small country imposes a higher tax than that of the large country. Moreover, we show that even if the domestic firm in the large country is less efficient, a joint venture by this firm and the foreign firm could be more productive, and the foreign firm could prefer to form a joint venture partnership with the domestic firm in the large country.

With the globalization of economic activities in recent decades, multinational firms have penetrated into foreign markets by adopting a means of foreign direct investment (FDI), and many countries compete with each other to attract foreign firms.1 The large proportion of FDI is in the form of joint ventures (JVs) (Al-Saadon and Das, 1996 and Zhong and Lahiri, 2009), and, in developing and transition countries such as China, India, Indonesia, Thailand, Vietnam, and Russia, the formulation of international joint ventures (IJVs) between local firms and foreign firms is observed. On the other hand, it is well known that the IJVs provide job creation and spillovers to the host countries. For example, the IJVs create technological spillovers from the foreign firms to the local firms in the host country, so there is a possibility that other local firms indirectly benefit from the IJVs. In a recent empirical study, Havranek and Irsova (2011) employ meta-analysis methodology to show that JVs of foreign and domestic firms have robust positive effects on other domestic firms in the host country.2 Therefore, the formulation of IJV is mutually beneficial for the domestic firms in the host country and foreign firms, and we might not be able to understate the importance of IJVs as a mode for entering foreign markets (Zhong & Lahiri, 2010). Reflecting these situations, in the literature on FDI, IJVs between firms have received much interest in theoretical studies, and various issues regarding IJVs have been analyzed (e.g., Al-Saadon and Das, 1996, Lee, 2004, Leung, 1995, Leung, 1998, Marjit et al., 2004, Müller and Schnitzer, 2006, Zhong and Lahiri, 2009 and Zhong and Lahiri, 2010). One of the most important issues concerning IJVs is the ownership distribution between the JV partners. For instance, Al-Saadon and Das (1996) investigate the ownership shares of an IJV by using a Nash bargaining approach. Zhong and Lahiri, 2009 and Zhong and Lahiri, 2010 develop a simple three-stage model with a non-Nash bargaining approach and examine the determination of profit allocation between the partners in the IJV. Zhong and Lahiri (2009) examine IJVs in an integrated market by using the two-country model with the same size and show that the foreign firm prefers to invest in the country with the more efficient firm and that the foreign firm provides more than half of the profits of the JV firm to its partner. The feature of their study is that the IJV in the integrated market has been examined, while the theoretical studies on the IJV in the integrated market are insufficient despite the progress of market integration (e.g., EU and NAFTA). In addition, in analyzing the IJVs in the integrated market, they assume that the potential host countries are the same size. However, the existing literature suggests that the investment location choices of the foreign firms are affected by both the effective tax rate imposed by the government of the host country and the market size (Haufler & Wooton, 1999). Therefore, the influence of the difference in the market size between the host countries might be an important factor in investigating the IJV in the integrated market. The purpose of this paper is to investigate IJVs in the integrated market by using the two-country model with asymmetric size. We focus on how the difference in country size between the two potential host countries affects the investment location choice of the foreign firm, the profit distribution between the JV partners, and the tax policy of the host countries.3 We therefore adopt the approach of Zhong and Lahiri (2009) and take into consideration the production efficiency of the incumbent domestic firms in addition to the difference in market size between the host countries.4 In our study, we show that both the difference in market size and the production efficiencies of the domestic firms in the host countries affect the tax policy of the host country and the foreign firm's location choice. In particular, we find that even though the domestic firm in the small country is less efficient, there exists the case that the government of the small country imposes a higher tax than that of the large country. Furthermore, we find that even if the domestic firm in the large country is less efficient, there exists the case that the JV by the domestic firm in the large country and the foreign firm is more productive, and the foreign firm prefers to form aJV partnership with the domestic firm in the large country. This remainder of this paper is organized as follows. Section 2 presents the basic model and deals with the case in which only the government of the host country imposes the output tax on its JV firm, while the government of the non-host country does not impose any tax on its domestic firm. Section 3 derives the equilibrium outcomes in two cases: (i) the foreign firm forms a JV partnership with the domestic firm in the large country, and (ii) the foreign firm forms a JV partnership with the domestic firm in the small country. Section 4 investigates the equilibrium outcomes obtained in the two cases. Section 5 extends the basic model and discusses the case that the government of the non-host country imposes the output tax on its domestic firm, while the government of the host country imposes the tax on the JV firm. Section 6 concludes the paper.

In this paper, we analyzed IJVs in an integrated market using a two-country model, by taking into account the market size difference between potential host countries without using the Nash bargaining approach. In particular, we focused on how the market size difference between two countries affects the productivity of the JV firm, the location choice of the foreign firm that wishes to form a JV partnership with the local firm, and the tax decision of the government of the host country. We showed that both the difference in market size and the production efficiencies of the domestic firms in the host countries affect the tax policy of the host country, and the foreign firm's location choice. As for profit sharing between JV partners, we showed that since offering a higher profit share to the domestic firm by the foreign firm causes a lower tax rate to be imposed by the government, the foreign firm has an incentive to bestow more than half of the profit of the JV firm on its JV partner. By using the two-country model with the same size, Zhong and Lahiri (2009) show that the foreign firm prefers to form a JV partnership with an efficient domestic firm. However, we found that even if the domestic firm in the large country is less efficient, there exists the case that the JV by the domestic firm in the large country and the foreign firm is more productive, and the foreign firm prefers to form a JV partnership with the domestic firm in the large country. Furthermore, we found that even though the domestic firm in the small country is less efficient, there exists the case that the government of the small country imposes a higher tax than that of the large country. In any case, in the IJVs of the integrated market, the size of the host country affects the investment location choice of the foreign firm and the tax policy of the host country.