Discussion Paper Details

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Title: Joint Ownership and the Hold-up Problem Under Asymmetric Information

Author(s): Patrick W. Schmitz

Publication Date: September 2007

Keyword(s): investment incentives, joint ownership and Property rights

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Schmitz, P. 2007. 'Joint Ownership and the Hold-up Problem Under Asymmetric Information'. London, Centre for Economic Policy Research.