Voluntary Technology Sharing under Partial Passive Ownership and Privatization Policy

Voluntary Technology Sharing under Partial Passive Ownership and Privatization Policy

When knowledge sharing is non-contractible, we investigate the effect of partial passive ownership (PPO) on the incentive of voluntary technology sharing between rival firms under privatization policy. We show that an efficient private firm chooses technology sharing irrespective of the presence of public firm when it has sufficiently high degree of PPO in the rival firm and this knowledge sharing always increases welfare. We also show that the privatization of public firm might deter voluntary technology sharing and decrease welfare if an efficient private firm has relatively high degree of partial passive ownership while cost gap between the private firms is not large. Finally, we examine a foreign firm’s voluntary technology sharing and show that the deterrence effect of privatization policy is less serious than domestic firm but privatization always decreases the welfare.