On Nonexclusive Membership in Competing Joint Ventures
1 March 2003
By Dr. Gregory Leonard with Dr. Jerry Hausman and Jean Tirole
This paper by NERA Senior Vice President Dr. Gregory Leonard with MIT Professor of Economics Dr. Jerry Hausman and Jean Tirole, Scientific Director of the Institut D'Economie Industrielle in France, evaluates the competitive and governance effects of "duality," which is defined as joint membership (e.g., by credit card issuing banks) in competing associations or joint ventures (e.g., credit card associations). The authors first demonstrate that an association that has a not-for-profit structure with a certain fee structure and duality will be productively efficient. The authors then analyze the impact on economic outcomes of having (i) exclusivity in place of duality and (ii) a for-profit structure in place of a not-for-profit structure.
Copyright 2003, RAND. All rights reserved. Used by permission. First published in The RAND Journal of Economics Volume 34, No.1, Spring 2003.
