http://repub.eur.nl/res/aut/3595/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/25502/ 2011-03-01T00:00:00Z This paper provides a theory of joint venture buy-outs in the presence of demand uncertainty. In an infinite horizon framework with demand uncertainty, we consider a foreign firm's decision on whether to form a joint venture or to open a fully owned subsidiary. Without the possibility of future share adjustment, the foreign firm enters the market through a joint venture if the host-country firm helps to reduce the uncertainty significantly. Consequently, the firm enters at an earlier point in time compared to the situation in which opening a fully owned subsidiary is the only option to the firm. The possibility of future share adjustment in the joint venture further increases the incentive to speed up foreign investment. Although the possibility of share adjustment results in a joint venture buy-out and can reduce the future profits of the host-country firm, it may increase host-country welfare by attracting foreign investment at an earlier point in time. We show the implications of learning in the joint venture. © 2011 The Authors. The Journal of Industrial Economics http://repub.eur.nl/res/pub/6588/ 2005-04-01T00:00:00Z The analysis in this paper shows that unpredictable variations in economic productivity may have a positive or negative effect on the average growth rate of output. This theoretical ambiguity result is not solely determined by the value of the elasticity of intertemporal substitution (of consumption) - as is the case in earlier analyses - but depends on two factors. That is, the growth-uncertainty relationship depends on whether returns to scale in knowledge creation are increasing or non-increasing and whether the elasticity of intertemporal substitution (of profits) is higher or lower than some critical value. Empirical studies concerning these two factors indicate that unpredictable variations in economic productivity have a negative effect on the average long-run growth rate. http://repub.eur.nl/res/pub/6714/ 2003-03-27T00:00:00Z This paper examines the effects of taxation on long-run growth in a two-sector endogenous growth model with (i) physical capital as an input in the education sector and (ii) leisure as an additional argument in the utility function. The analysis of the effects of taxation - including income taxation, capital income taxation and labor income taxation - distinguishes between the case with a unique (interior) balanced growth path and the case with multiple balanced growth paths. Due to the flexibility of labor supply, taxation of income may induce agents to spend more or less time on leisure activities. In the case of income taxation, where capital and labor income are taxed equally, the resulting effect on the growth rate is negative. The contribution of endogenous leisure is confined to reducing or increasing the size of the effect on the growth rate. If only capital income is taxed, the direction of the effect may reverse. In that case, the positive effect of the increase in total non-leisure time dominates the direct negative effect, implying that capital taxation increases the long-run growth rate. http://repub.eur.nl/res/pub/6814/ 2002-10-21T00:00:00Z How does risk or uncertainty in the productivity of research affect the growth rate of the economy? To answer this question, a model of endogenous technological change is used where sustained growth stems from intentional investments in R&D from profit-maximizing firms. The uncertainty arises from the productivity of these investments in R&D. The main result of this analysis is that the relationship between long-run growth and uncertainty (on the productivity of knowledge creation) depends on two main factors - the returns to scale in knowledge creation (increasing or non-increasing) and the value of the elasticity of intertemporal substitution (higher or lower than some critical value).Based on empirical studies on the returns to scale in knowledge creation ("non-increasing") and the value of the elasticity of intertemporal substitution ("higher than the critical value"), we expect a negative relationship between long-run growth and uncertainty regarding the productivity of knowledge creation.