International vertical collaboration between a producer and a seller

Using a vertically linked model of international trade where producers and sellers are different entities and belong to two different countries, this study mainly explore how international firms collaborate.;In the first chapter, we summarize the past literature and present the structure of this dissertation.;In the Second chapter, we examine the issue of endogenous leadership. In the absence of policy intervention, there are two cases depending on whether the producer or the seller is the leader. In the presence of policy intervention, the nationality of the leader and that of the follower also becomes important. We find necessary and sufficient conditions for endogenous leadership to arise, and find that in the presence of policy intervention and lump-sum transfers, leadership by the domestic firm --- whether it is a producer or a seller --- will emerge as the equilibrium.;In the third chapter, we examine the issue of operating structure. We consider another type of collaboration, i.e., Joint Venture. We compare the profits of both firms with that of previous chapter, and find the preferred collaboration structure. In the absence of policy intervention, we find that the both entities will always prefer to form a joint venture. In the presence of policy intervention, the nationality of the producer and that of the producer becomes important. When domestic firm is the seller, we find a necessary and sufficient conditions for those two firms to prefer JV to independent operation. However, when domestic firm is the producer, both firms will prefer joint venture.;In the fourth chapter, we consider the case where one of the firms is a State-Owned-Enterprise (SOE) of home country. We develop a three-stage game to analyze the optimal level of privatization of the SOE firm. When Domestic SOE is the leader, no matter whether it is seller or producer, government's decision on privatization level of SOE depends on the agency-cost the SOE faces. The government will prefer not to privatize the SOE if there is no agency-cost. It will prefer deeper privatization if the agency-cost is higher. The government will give up all its ownership of the SOE if the agency-cost is very high. On the other hand, if the SOE is the follower, the government will choose not to privatize SOE ever when it is the seller, while choosing not to privatize under some condition when it is the producer.