Dissolving a Partnership Efficiently

Peter Cramton, Robert Gibbons and Paul Klemperer

Econometrica, 1987, vol. 55, issue 3, 615-32

Abstract: Several partners jointly own an asset that may be traded among them. Each partner has a valuation for the asset. The valuations are known privately and drawn independently from a common probability distribution. The authors characterize the set of all incentive- compatible and interim individually-rational trading mechanisms, and give a simple necessary and sufficient condition for such mechanisms to dissolve the partnership ex post efficiently. A bidding game is constructed that achieves such dissolution whenever it is possible. Despite incomplete information about the valuation of the asset, a partnership can be dissolved ex post efficiently provided no single partner owns too large a share. Copyright 1987 by The Econometric Society.

Date: 1987
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Related works:
Working Paper: Dissolving a Partnership Efficiently (1998)
Working Paper: Dissolving a Partnership Efficiently (1985)
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