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Asset Ownership and Contractability of Interaction

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  • Andreas Roider

Abstract

In a property-rights framework, I study how organizational form and quantity contracts interact in generating investment incentives. The model nests standard property-rights and hold-up models as special cases. I admit general message-dependent contracts, but provide conditions under which non-contingent contracts are optimal. First, I contribute to the foundation of the property-rights theory: I characterize under which circumstances its predictions are correct when trade is contractible. Second, I study how the optimal use of the incentive instruments depends on the environment. This is in the spirit of the multitasking literature. Finally, the model produces implications of the property-rights theory that are empirically testable.

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File URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse12_2002.pdf
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Bibliographic Info

Paper provided by University of Bonn, Germany in its series Bonn Econ Discussion Papers with number bgse12_2002.

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Length: 29
Date of creation: May 2002
Date of revision: May 2003
Handle: RePEc:bon:bonedp:bgse12_2002

Contact details of provider:
Postal: Bonn Graduate School of Economics, University of Bonn, Adenauerallee 24 - 26, 53113 Bonn, Germany
Fax: +49 228 73 6884
Web page: http://www.bgse.uni-bonn.de

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Keywords: Property Rights; Incomplete Contracts; Specific Investments;

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References

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  1. Cai, Hongbin, 2003. " A Theory of Joint Asset Ownership," RAND Journal of Economics, The RAND Corporation, vol. 34(1), pages 63-77, Spring.
  2. George Baker & Robert Gibbons & Kevin J. Murphy, 2002. "Relational Contracts And The Theory Of The Firm," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 39-84, February.
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Citations

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Cited by:
  1. Goller, Daniel & Stremitzer, Alexander, 2009. "Breach Remedies Inducing Hybrid Investments," Working Papers 72, Yale University, Department of Economics.
  2. Watson, Joel & Buzard, Kristy, 2009. "Contract, Renegotiation, and Hold Up: General Results on the Technology of Trade and Investment," University of California at San Diego, Economics Working Paper Series qt3923q7kz, Department of Economics, UC San Diego.
  3. James H. Love, 2010. "Opportunism, Hold-Up and the (Contractual) Theory of the Firm," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 166(3), pages 479-501, September.
  4. Buzard, Kristy & Watson, Joel, 2010. "Contract, Renegotiation, and Hold Up: Results on the Technology of Trade and Investment," University of California at San Diego, Economics Working Paper Series qt3df3q4vg, Department of Economics, UC San Diego.
  5. Takanori Adachi, 2010. "Ownership Structure as a Continuous Variable: A Note on Joint Ownership in the Grossman-Hart-Moore Theory of the Firm," Economics Bulletin, AccessEcon, vol. 30(3), pages 2112-2118.
  6. Robert Gibbons, Editor & John Roberts, Editor, 2012. "The Handbook of Organizational Economics," Economics Books, Princeton University Press, edition 1, volume 1, number 9889.
  7. Alexander Stremitzer, 2012. "Standard Breach Remedies, Quality Thresholds, and Cooperative Investments," Journal of Law, Economics and Organization, Oxford University Press, vol. 28(2), pages 337-359.
  8. Watson, Joel & Wignall, Chris, 2009. "Hold-Up and Durable Trading Opportunities," University of California at San Diego, Economics Working Paper Series qt8p8284wg, Department of Economics, UC San Diego.
  9. Brooks, Richard & Stremitzer, Alexander, 2009. "On and Off Contract Remedies," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 290, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  10. Christoph Luelfesmann, 2007. "Strategic Shirking in Bilateral Trade," Discussion Papers dp07-21, Department of Economics, Simon Fraser University.
  11. Stephanie Rosenkranz & Patrick W. Schmitz, 2006. "Can Coasean bargaining justify Pigouvian taxation?," Bonn Econ Discussion Papers bgse7_2006, University of Bonn, Germany.
  12. Berardi, Nicoletta & Seabright, Paul, 2010. "Joint Ventures as a Commitment Device Against Lobbies," CEPR Discussion Papers 7714, C.E.P.R. Discussion Papers.
  13. Hoppe, Eva I. & Schmitz, Patrick W., 2010. "Public versus private ownership: Quantity contracts and the allocation of investment tasks," Journal of Public Economics, Elsevier, vol. 94(3-4), pages 258-268, April.
  14. Göller, Daniel & Stremitzer, Alexander, 2009. "Breach Remedies Including Hybrid Investments," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 282, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.

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