Appropriability, Investment Incentives and the Property Rights Theory of the Firm
نویسندگان
چکیده
This paper examines the property rights theory of the firm when a manager’s relationship-specific investment can be partially appropriated by the owner of an asset when cooperation breaks down. For example ownership typically confers the right to continue with a project even should the production team dissolve. The investments of non-owners may then be devalued, but are seldom wholly loss to the owner. With such spillovers, the outside-option principle can be incorporated into the GrossmanHart-Moore framework without implying that ownership demotivates. Enriched predictions on the determinants of integration emerge.
منابع مشابه
The Implications of Sequential Investment in the Property Rights Theory of the Firm
In the property rights theory of the firm, control over assets (ownership) affords bargaining power in the case of re-negotiation, providing incentives for parties to make relationship specific investments. The models predict that property rights will be allocated so as to maximise surplus generated from investment. However, these models assume that investments are made simultaneously. In this ...
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