Schmitz, Patrick W. (2017). Asymmetric information and the property rights approach to the theory of the firm. Econ. Lett., 159. S. 96 - 100. LAUSANNE: ELSEVIER SCIENCE SA. ISSN 1873-7374

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Abstract

In the Grossman-Hart-Moore property rights approach to the theory of the firm, it is usually assumed that information is symmetric. Ownership matters for investment incentives, provided that investments are partly relationship-specific. We study the case of completely relationship-specific investments (i.e., the disagreement payoffs do not depend on the investments). It turns out that if there is asymmetric information, then ownership matters for investment incentives and for the expected total surplus. Specifically, giving ownership to party B can be optimal, even when only party A has to make an investment decision and even when the owner's expected disagreement payoff is larger under A-ownership. (C) 2017 The Author. Published by Elsevier B.V.

Item Type: Journal Article
Creators:
CreatorsEmailORCIDORCID Put Code
Schmitz, Patrick W.UNSPECIFIEDUNSPECIFIEDUNSPECIFIED
URN: urn:nbn:de:hbz:38-215339
DOI: 10.1016/j.econlet.2017.07.026
Journal or Publication Title: Econ. Lett.
Volume: 159
Page Range: S. 96 - 100
Date: 2017
Publisher: ELSEVIER SCIENCE SA
Place of Publication: LAUSANNE
ISSN: 1873-7374
Language: English
Faculty: Unspecified
Divisions: Unspecified
Subjects: no entry
Uncontrolled Keywords:
KeywordsLanguage
COSTSMultiple languages
EconomicsMultiple languages
Refereed: Yes
URI: http://kups.ub.uni-koeln.de/id/eprint/21533

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