Ownership, Access, and Sequential Investment

Maxim Mai, Vladimir Smirnov and Andrew Wait ()

Canadian Journal of Economics, 2014, vol. 47, issue 1, 203-231

Abstract: We extend the propertyrights framework to allow for a separation of the ownership rights of access and veto and for sequential investment. Parties investing first do so before contracting is feasible. It is possible, however, that parties investing second can share (at least some of) their investment costs. Along with this costsharing effect, the incentive to invest is affected by a strategic effect generated by sequential investment. Together these effects can overturn some of the predictions of the propertyrights literature. For example, the most inclusive ownership structure might not be optimal, even if all investments are complementary.

JEL-codes: D23 L22 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (2)

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Journal Article: Ownership, Access, and Sequential Investment (2014)
Working Paper: Ownership, access and sequential investment (2011)
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