Bargaining position, bargaining power, and the property rights approach

Patrick Schmitz

MPRA Paper from University Library of Munich, Germany

Abstract: In the property rights approach to the theory of the firm (Hart, 1995), parties bargain about whether or not to collaborate after non-contractible investments have been made. Most contributions apply the regular Nash bargaining solution. We explore the implications of using the generalized Nash bargaining solution. A prominent finding regarding the suboptimality of joint ownership turns out to be robust. However, in contrast to the standard property rights model, it may well be optimal to give ownership to a party whose investments are less productive, provided that this party's ex-post bargaining power is relatively small.

Keywords: ownership; incomplete contracts; bargaining; investment incentives (search for similar items in EconPapers)
JEL-codes: C78 D23 D86 L23 L24 M11 (search for similar items in EconPapers)
Date: 2013-02
New Economics Papers: this item is included in nep-cta, nep-gth and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

Downloads: (external link)
https://mpra.ub.uni-muenchen.de/44953/1/MPRA_paper_44953.pdf original version (application/pdf)

Related works:
Journal Article: Bargaining position, bargaining power, and the property rights approach (2013)
Working Paper: Bargaining position, bargaining power, and the property rights approach (2013)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:44953

Access Statistics for this paper

More papers in MPRA Paper from University Library of Munich, Germany Ludwigstraße 33, D-80539 Munich, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Joachim Winter ().