ORCID: https://orcid.org/0000-0002-5011-0828
(1998):
Sequential investments and options to own.
In: RAND Journal of Economics, Vol. 29, No. 4: pp. 633-653
This is the latest version of this item.
Abstract
Contingent ownership structures are prevalent in joint ventures. We offer an explanation based on the investment incentives provided by such an arrangement. We consider a holdup problem in which two parties make relationship-specific investments sequentially to generate a joint surplus in the future. In our model, the following ownership structure implements first-best investments: one party owns the firm initially, while the other party has the option to buy the firm at a set price at a later date. This result is robust to the possibility of renegotiation and uncertainty.
Item Type: | Journal article |
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Keywords: | Options contracts; Return on investment; Ownership rights; Investment decisions; Surplus; Induced investment; Price efficiency; Joint ownership; Bargaining power; Structural capital |
Faculties: | Economics Economics > Chairs > Seminar for Economic Theory |
Subjects: | 300 Social sciences > 330 Economics |
ISSN: | 1756-2171; 0741-6261 |
Language: | English |
Item ID: | 19327 |
Date Deposited: | 15. Apr 2014 08:50 |
Last Modified: | 25. Jan 2019 18:32 |
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Sequential Investments and Options to Own. (deposited 15. Apr 2014 08:50)
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