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Determinants of Asset Ownership: A Study of the Carpentry Trade

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  • Duncan I. Simester

    (MIT Sloan School of Management)

  • Birger Wernerfelt

    (MIT Sloan School of Management)

Abstract

We use a data set describing ownership of productive assets in the carpentry trade to evaluate several factors influencing the allocation of asset ownership between an employer and his employees. The findings suggest that the allocation involves a tradeoff between two incentive effects influencing how the employee uses the asset and what the employer decides it should be used for. In particular, the allocation of ownership hinges on whether an asset is easily lost or stolen, which favors employee ownership, and whether the employer's task assignment affects the asset's depreciation, which favors employer ownership. There is also evidence that more expensive assets and assets that are shared by more than one employee are more likely to be owned by the employer. The results suggest that a general theory of asset ownership should be able to take account of at least these effects. © 2005 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

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Bibliographic Info

Article provided by MIT Press in its journal Review of Economics and Statistics.

Volume (Year): 87 (2005)
Issue (Month): 1 (February)
Pages: 50-58

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Handle: RePEc:tpr:restat:v:87:y:2005:i:1:p:50-58

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Web page: http://mitpress.mit.edu/journals/

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Cited by:
  1. Allen N. Berger & Nathan H. Miller & Mitchell A. Petersen & Raghuram G. Rajan & Jeremy C. Stein, 2002. "Does Function Follow Organizational Form? Evidence From the Lending Practices of Large and Small Banks," NBER Working Papers 8752, National Bureau of Economic Research, Inc.
  2. Hu, Y. & Hendrikse, G.W.J., 2007. "Allocation of Decision Rights in Fruit and Vegetable Contracts in China," ERIM Report Series Research in Management ERS-2007-077-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus Uni.
  3. Massa, Massimo & Reuter, Jonathan & Zitzewitz, Eric, 2010. "When should firms share credit with employees? Evidence from anonymously managed mutual funds," Journal of Financial Economics, Elsevier, vol. 95(3), pages 400-424, March.
  4. Corts, Kenneth S., 2006. "The interaction of task and asset allocation," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 887-906, September.
  5. Wernerfelt, Birger, 2003. "Governance of Adjustments," Working papers 4412-03, Massachusetts Institute of Technology (MIT), Sloan School of Management.

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