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A Theory of Joint Asset Ownership

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  • Cai, Hongbin

Abstract

I offer a theory of joint ownership by extending the standard property right theory of the firm to situations where parties can endogenously choose the degree of specificity of their investments (i.e., both the type of investment--specific and general--and the level of each). When specific and general investments are complements, the standard GHM results are obtained and joint ownership is suboptimal. When specific and general investments are substitutes, joint ownership is optimal as long as trade takes place within the relationship. Joint ownership provides stronger incentives to make specific investments than any other forms of ownership by discouraging general investments. Copyright 2003 by the RAND Corporation.

Suggested Citation

  • Cai, Hongbin, 2003. " A Theory of Joint Asset Ownership," RAND Journal of Economics, The RAND Corporation, vol. 34(1), pages 63-77, Spring.
  • Handle: RePEc:rje:randje:v:34:y:2003:i:1:p:63-77
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    Cited by:

    1. Yang Yao & Nancy Qia & Monica Martinez Bravo & Gerard Padro i Miquel, 2011. "Do Local Elections in Non-Democracies Increase Accountability? Evidence from Rural China," Working Papers id:3931, eSocialSciences.
    2. Naomi Lamoreaux & Jean-Laurent Rosenthal, 2004. "Corporate Governance and the Plight of Minority Shareholders in the United States Before the Great Depression," NBER Working Papers 10900, National Bureau of Economic Research, Inc.
    3. repec:eee:indorg:v:52:y:2017:i:c:p:133-164 is not listed on IDEAS
    4. repec:bla:jecsur:v:31:y:2017:i:1:p:281-302 is not listed on IDEAS
    5. 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.
    6. Müller, Daniel & Schmitz, Patrick W., 2016. "Transaction costs and the property rights approach to the theory of the firm," European Economic Review, Elsevier, vol. 87(C), pages 92-107.
    7. Hideshi Itoh & Hodaka Morita, 2006. "Formal Contracts, Relational Contracts, and the Holdup Problem," CESifo Working Paper Series 1786, CESifo Group Munich.
    8. Andreas Roider, 2004. "Asset Ownership and Contractibility of Interaction," RAND Journal of Economics, The RAND Corporation, vol. 35(4), pages 787-802, Winter.
    9. Charlie Joyez, 2017. "Firm heterogeneity and the integration trilemma: The utility of Joint ventures in integration versus outsourcing models," Working Papers DT/2017/09, DIAL (Développement, Institutions et Mondialisation).
    10. Gattai, Valeria & Natale, Piergiovanna, 2013. "What makes a joint venture: Micro-evidence from Sino-Italian contracts," Review of Financial Economics, Elsevier, vol. 22(4), pages 194-205.
    11. Christian A. Ruzzier, 2009. "Asset Specificity and Vertical Integration: Williamson’s Hypothesis Reconsidered," Harvard Business School Working Papers 09-119, Harvard Business School.
    12. Ilya Segal & Michael D.Whinston, 2012. "Property Rights," Introductory Chapters,in: Robert Gibbons & John Roberts (ed.), : The Handbook of Organizational Economics Princeton University Press.
    13. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Factor Markets Working Papers 123, Centre for European Policy Studies.
    14. Albert Jolink & Eva Niesten, 2016. "The impact of venture capital on governance decisions in collaborations with start-ups," Small Business Economics, Springer, vol. 47(2), pages 331-344, August.
    15. Thomas F. Hellmann & Veikko Thiele, 2012. "A Theory of the Firm based on Partner Displacement," NBER Working Papers 18495, National Bureau of Economic Research, Inc.
    16. Nicola Meccheri, 2009. "Large Breach Penalties and Managers´ Incentives to Invest Inside or Outside Firms," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 165(4), pages 598-621, December.
    17. Gürtler, Oliver, 2006. "Optimal Ownership Structures in the Presence of Investment Signals," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 103, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
    18. Berardi, Nicoletta & Seabright, Paul, 2010. "Joint Ventures as a Commitment Device Against Lobbies," CEPR Discussion Papers 7714, C.E.P.R. Discussion Papers.
    19. Jean-Laurent Rosenthal, 2004. "Corporate Governance and the Plight of Minority Shareholders in the United States before the Great Depression. Joint with Naomi Lamoreaux," UCLA Economics Online Papers 308, UCLA Department of Economics.
    20. Hodaka Morita & Maroš Servátka, 2014. "Investment in Outside Options as Opportunistic Behavior: An Experimental Investigation," Working Papers in Economics 14/31, University of Canterbury, Department of Economics and Finance.
    21. Richard Scheelings, 2005. "Essays in Law and Economics," Levine's Working Paper Archive 618897000000000950, David K. Levine.
    22. Naomi R. Lamoreaux & Jean-Laurent Rosenthal, 2006. "Contractual Tradeoffs and SMEs Choice of Organizational Form, A View from U.S. and French History, 1830-2000," NBER Working Papers 12455, National Bureau of Economic Research, Inc.
    23. Valeria Gattai & Piergiovanna Natale, 2014. "Joint Ventures and the Property Rights Theory of the Firm: a Review of the Literature," Working Papers 287, University of Milano-Bicocca, Department of Economics, revised Dec 2014.
    24. Curtiss, Jarmila, 2012. "Determinants of Financial Capital Use: Review of theories and implications for rural businesses," Working Papers 122846, Factor Markets, Centre for European Policy Studies.
    25. R. Javier Bustos S. & Julio Peña Torres & Manuel Willington, 2007. "Propiedad Extranjera y Especialización Productiva en la Industria del Vino en Chile," ILADES-Georgetown University Working Papers inv184, Ilades-Georgetown University, Universidad Alberto Hurtado/School of Economics and Bussines.

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