The Property-Rights Theory of the Firm with Endogenous Timing of Asset Purchase

Ben Lockwood and David de Meza

STICERD - Theoretical Economics Paper Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

Abstract: The standard property-rights theory of the firm assumes that prior to investing in human capital, team members meet and negotiate asset ownership. This paper endogenizes the event sequence in a matching model of market equilibrium. Equilibria exist in which, for strategic and efficiency reasons, agents invest in human capital and buy assets prior to matching and simple ownership arrangements are chosen. As in the original work, ownership of physical assets affects the incentive to invest. However, in this setting ownership creates rent shifting, search and asset transfer advantages, so new results emerge. It is no longer necessarily true that key agents own. As for the form of integration, there may be multiple Pareto-rankable equilibria.

Keywords: Property rights; incomplete contracts; matching; asset ownership. (search for similar items in EconPapers)
Date: 1998-12
References: Add references at CitEc
Citations: View citations in EconPapers (4)

Downloads: (external link)
https://sticerd.lse.ac.uk/dps/te/te364.pdf (application/pdf)

Related works:
Working Paper: The property-rights theory of the firm with endogenous timing of asset purchase (1998)
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:cep:stitep:364

Access Statistics for this paper

More papers in STICERD - Theoretical Economics Paper Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE
Bibliographic data for series maintained by ().