Partnership dissolution, complementarity, and investment incentives
Partnerships form in order to take advantage of complementary skills; however, new opportunities may arise that make some partners' skills useless. We analyse partnerships that anticipate possible dissolution under the most commonly advised and widely used dissolution rule known as 'buy--sell provision'. We find that this rule assures neither ex post efficient dissolutions nor ex ante efficient investments. We also discuss whether renegotiations, supplementing the buy--sell provision with the right to veto, or allowing the uninformed partner to set the dissolution price may restore efficiency, and whether pre-emptive requests for dissolution occur in equilibrium. Copyright 2010 Oxford University Press 2009 All rights reserved, Oxford University Press.
Year of publication: |
2010
|
---|---|
Authors: | Li, Jianpei ; Wolfstetter, Elmar |
Published in: |
Oxford Economic Papers. - Oxford University Press. - Vol. 62.2010, 3, p. 529-552
|
Publisher: |
Oxford University Press |
Saved in:
Online Resource
Saved in favorites
Similar items by person
-
Three essays on efficiency and incentives in teams and partnerships
Li, Jianpei, (2007)
-
Partnership dissolution, complementarity, and investment incentives
Li, Jianpei, (2010)
-
Partnership dissolution, complementarity, and investment incentives
Li, Jianpei, (2004)
- More ...