We study the economics of international joint ventures with administrative data for China exploiting the change in foreign direct investment policy as China entered the WTO in the year 2002. Accounting for a quarter of all international joint ventures worldwide, we first show that foreign...

This paper presents a new theory on conglomeration. We show that conglomeration can serve as an effective mechanism in risk hedging. A conglomerate can be set up so that risks among some of its subsidiaries are negatively correlated. By such a design, the overall risk of the conglomerate is kept...