Asset Ownership and Contractability of Interaction
In a property-rights framework, I study how organizational form and quantity contracts interact in generating investment incentives. The model nests standard property-rights and hold-up models as special cases. I admit general message-dependent contracts, but provide conditions under which non-contingent contracts are optimal. First, I contribute to the foundation of the property-rights theory: I characterize under which circumstances its predictions are correct when trade is contractible. Second, I study how the optimal use of the incentive instruments depends on the environment. This is in the spirit of the multitasking literature. Finally, the model produces implications of the property-rights theory that are empirically testable.
Property Rights, Incomplete Contracts, Specific Investments
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