Working Paper: CEPR ID: DP6478
Authors: Patrick W. Schmitz
Abstract: In the standard property rights approach to the theory of the firm, joint ownership cannot be optimal, because it induces smaller investments in human capital than ownership by a single party. This result holds under the assumption that bargaining is always ex post efficient due to symmetric information. However, joint ownership can be optimal if the parties have private information about the payoffs that they can realize on their own.
Keywords: Investment Incentives; Joint Ownership; Property Rights
JEL Codes: D23; D82; D86
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| joint ownership (R21) | smaller investments in human capital (D29) |
| joint ownership under asymmetric information (D82) | enhanced investment incentives (E22) |
| joint ownership (private information) (D82) | higher levels of investment (E22) |
| joint ownership (R21) | better default payoff (G40) |
| joint ownership (R21) | improved bargaining position (C78) |