Profit Share and Partner Choice in International Joint Ventures

This paper suggests a new approach to the determination of profit allocation between the partners in joint ventures. We also examine the issue of partnership choice. The foreign firm would be willing to give more than half of profits to its partner, and it would like to choose the more efficient firm. However, the host government, under certain situation, may persuade the foreign firm, by a suitable lump-sum transfer, to form partnership with the less efficient firm