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Understanding Ownership Residual Rights of Control and Appropriable Control Rights

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  • Kirsten Foss
  • Nicolai J. Foss

Abstract

We discuss the notion of ownership in economics, taking our point of departure in the Grossman-Hart-Moore property rights approach. We criticize the exclusive identification of ownership with residual rights to control in this approach, and argue that economic organization may be rendered determinate under complete contracting (contrary to the GHM approach). Crucially, we argue that under complete contracting, some control rights may be appropriable because of measurement and enforcement costs. This holds the key to a theory of ownership that is not dependent on the notion of residual rights to control, but rather relies on appropriable control rights. However, the two perspectives may be complementary rather than rival.

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File URL: http://www3.druid.dk/wp/19990004.pdf
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Bibliographic Info

Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 99-4.

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Date of creation: 1999
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Handle: RePEc:aal:abbswp:99-4

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Web page: http://www.druid.dk/

Related research

Keywords: Ownership; property rights; complete and incomplete contracts;

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References

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Citations

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Cited by:
  1. Wolfgang Gick, 1999. "Vertikale Integration und informations- und kommunikationsintensive Dienstleistungen," Working Paper Series B 1999-08, Friedrich-Schiller-Universität Jena, Wirtschaftswissenschaftliche Fakultïät.
  2. Kirsten Foss & Nicolai J. Foss, 1999. "Organizing Economic Experiments The Role of Firms," DRUID Working Papers 99-5, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  3. Jongwook Kim & Joseph T. Mahoney, 2005. "Property rights theory, transaction costs theory, and agency theory: an organizational economics approach to strategic management," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(4), pages 223-242.
  4. Jongwook Kim & Joseph T. Mahoney, 2002. "Resource-based and property rights perspectives on value creation: the case of oil field unitization," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 23(4-5), pages 225-245.
  5. Mahoney, Joseph & Asher, Cheryl Carleton & Mahoney, James, 2004. "Towards a Property Rights Foundation for a Stakeholder Theory of the Firm," Working Papers 04-0116, University of Illinois at Urbana-Champaign, College of Business.

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