Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments June 3, 2022 erstellt
Beschreibung:
By sharing production resources, integrated firms have higher returns on investment for intangible knowledge-based assets in comparison to stand-alone firms (Markusen 1995). Building on a single-leader-multi-follower game, this paper considers business groups, where a parent firm (the leader) operates in a competitive single-product market and delegates production to profit-maximizing affiliate firms (the followers). We investigate the relation between the parent firm's control of the value chain and technology sharing in decentralized business groups, where the parent decides the level of investment in shared technology and the extent of revenue sharing to compensate affiliates for their production. Affiliates respond to these incentives with their production decisions. To capture the parent's control of the value chain, this modeling framework supports two different specifications: full delegation and partial delegation. For the former, we provide an exact characterization of the equilibrium solution, whereas for business groups operating under partial delegation, we provide tight lower and upper bounds, computable by state-of-the-art optimization methods. On the empirical side, we show the applicability of our model by means of a customized version of the Orbis dataset that focuses on European firms with complete parent-affiliate balance sheet information at the firm-year level. After uncovering how the parent's control of the value chain is related to investment in intangible assets, our advocated approach reaffirms stylized facts and pinpoints a trade-off between sharing technology and revenues