A Theory of Joint Ownership
نویسندگان
چکیده
We show that joint ownership (partnership or joint venture) can implement Þrst best in a twice repeated game when each agent believes that the other party is honest with a very small probability. In the Þnal period the ownership structure is renegotiated because joint ownership is ex post inefficient. If an agent has cheated her outside option is very low since by cheating she has lost her reputation while an unrevealed agent has a much higher outside option. Therefore in renegotiation most of the surplus is distributed away from the cheater. Renegotiation provides a punishment mechanism so that Þrst best can be supported. JEL Classification numbers: D23, L14, L22
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