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Joint ownership and the hold-up problem under asymmetric information

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  • Schmitz, Patrick W.

Abstract

In the standard property rights theory, joint ownership cannot be optimal, because it induces smaller investments in human capital than ownership by a single party. This result can be overturned if the parties have private information about the payoffs they can realize on their own.

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Bibliographic Info

Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 99 (2008)
Issue (Month): 3 (June)
Pages: 577-580

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Handle: RePEc:eee:ecolet:v:99:y:2008:i:3:p:577-580

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  1. Hart, Oliver & Shleifer, Andrei & Vishny, Robert W, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1127-61, November.
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  4. Oliver Hart & John Moore, 1998. "Foundations of Incomplete Contracts," Harvard Institute of Economic Research Working Papers 1846, Harvard - Institute of Economic Research.
  5. Jean Tirole, 1999. "Incomplete Contracts: Where Do We Stand?," Econometrica, Econometric Society, vol. 67(4), pages 741-782, July.
  6. Rosenkranz, Stephanie & Schmitz, Patrick W., 1999. "Know-how disclosure and incomplete contracts," MPRA Paper 12533, University Library of Munich, Germany.
  7. Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers 372, Massachusetts Institute of Technology (MIT), Department of Economics.
  8. Aghion, Philippe & Tirole, Jean, 1994. "The Management of Innovation," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 1185-1209, November.
  9. Rosenkranz, Stephanie & Schmitz, Patrick W., 2003. "Optimal allocation of ownership rights in dynamic R&D alliances," Games and Economic Behavior, Elsevier, vol. 43(1), pages 153-173, April.
  10. Patrick W. Schmitz, 2006. "Information Gathering, Transaction Costs, and the Property Rights Approach," American Economic Review, American Economic Association, vol. 96(1), pages 422-434, March.
  11. Maija Halonen, 2002. "Reputation And The Allocation Of Ownership," Economic Journal, Royal Economic Society, vol. 112(481), pages 539-558, July.
  12. Stephanie Rosenkranz & Patrick W. Schmitz, 2004. "Joint Ownership And Incomplete Contracts: The Case Of Perfectly Substitutable Investments," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 56(1), pages 72-89, January.
  13. Hart, Oliver D. & Moore, John, 1990. "Property Rights and the Nature of the Firm," Scholarly Articles 3448675, Harvard University Department of Economics.
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  16. Eric Maskin & John Riley, 1984. "Monopoly with Incomplete Information," RAND Journal of Economics, The RAND Corporation, vol. 15(2), pages 171-196, Summer.
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Citations

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Cited by:
  1. Schmitz, Patrick W., 2001. "The Hold-Up Problem and Incomplete Contracts: A Survey of Recent Topics in Contract Theory," MPRA Paper 12562, University Library of Munich, Germany.
  2. Schmitz, Patrick W., 2010. "On contractual solutions to hold-up problems with quality uncertainty and unobservable investments," MPRA Paper 23157, University Library of Munich, Germany.
  3. Schmitz, Patrick W, 2013. "Bargaining position, bargaining power, and the property rights approach," CEPR Discussion Papers 9281, C.E.P.R. Discussion Papers.
  4. Schmitz, Patrick W., 2009. "Contractual solutions to hold-up problems with quality uncertainty and unobservable investments," CEPR Discussion Papers 7584, C.E.P.R. Discussion Papers.
  5. Schmitz, Patrick W, 2013. "Investments in physical capital, relationship-specificity, and the property rights approach," CEPR Discussion Papers 9396, C.E.P.R. Discussion Papers.
  6. Christa N. Brunnschweiler & Simone Valente, 2013. "Property Rights, Oil and Income Levels: Over a Century of Evidence," Working Paper Series 15613, Department of Economics, Norwegian University of Science and Technology.
  7. Kurt Annen, 2009. "Efficiency out of disorder: Contested ownership in incomplete contracts," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 597-610.

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