Access, Veto and Ownership in the Theory of the Firm
AbstractOwnership may not always be the best driver for investment incentives in an incomplete contract context. This paper shows that ownership has two facets (access and veto) which can be used specifically, and sometimes independently, to foster investment. Access is more efficient than ownership when assets are complements at the margin, and veto is sometimes more efficient when assets are substitutes at the margin. In particular, outside veto is more efficient than ownership because it reduces the incentive to invest on substitute assets. And joint veto is more efficient than ownership because it protects the incentives of highly productive agents while preventing them to merge the asset with substitute assets. We discuss several implications, in particular the existence of shareholders and non-owner workers, the optimality of outside ownership, joint ownership and partnerships, hybrid governance structures, employments contracts and capital structure (debt vs equity).
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University of Sydney, School of Economics in its series Working Papers with number 2006-01.
Date of creation: Jan 2006
Date of revision:
Theory of the firm; Property rights; Bargaining; Ownership; Access; Ve to;
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statistics
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vanessa Holcombe).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.