Short Notes: joint venture
Posted by Ripon Abu Hasnat on Tuesday, May 27, 2014 | 0 comments
A
joint venture is an association of firms or individuals formed to undertake a specific
business project. It is similar to a
partnership, but limited to a specific project (such as producing a specific
product or doing research in a specific area).
Joint
ventures can become an issue for competition policy when they are established by
competing firms. Joint ventures are usually
justified on the grounds that the specific project is risky and requires large
amounts of capital. Thus, joint ventures
are common in resource extraction industries where capital costs are high and
where the possibility of failure is also high.
Joint ventures are now becoming more prevalent in the development of new
technologies.
In
terms of competition policy, the problem is to weigh the potential reduction in
competition against the potential benefits of pooling risks, sharing capital
costs and diffusing knowledge. At
present there is considerable debate in many countries over the degree to which
research joint ventures should be subject to competition law.
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