Understanding Ownership Residual Rights of Control and Appropriable Control Rights

Kirsten Foss and Nicolai Foss ()

No 99-4, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: We discuss the notion of ownership in economics, taking our point of departure in the Grossman-Hart-Moore property rights approach. We criticize the exclusive identification of ownership with residual rights to control in this approach, and argue that economic organization may be rendered determinate under complete contracting (contrary to the GHM approach). Crucially, we argue that under complete contracting, some control rights may be appropriable because of measurement and enforcement costs. This holds the key to a theory of ownership that is not dependent on the notion of residual rights to control, but rather relies on appropriable control rights. However, the two perspectives may be complementary rather than rival.

Keywords: Ownership; property rights; complete and incomplete contracts (search for similar items in EconPapers)
JEL-codes: D23 D80 L22 (search for similar items in EconPapers)
Date: 1999
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