Investment spillovers and the allocation of property rights

Valeria Gattai and Piergiovanna Natale

Economics Letters, 2016, vol. 145, issue C, 109-113

Abstract: In the context of the property rights theory of the firm, we study the role of investment spillovers in shaping the efficiency ranking of ownership regimes. In our model, spillovers arise from asset-embodied investment and footloose investment. Under the former, the benefits of investment can be appropriated only through asset control; under the latter, the benefits of investment can be appropriated independently of asset control. Our model predicts that asset-embodied investment favors the adoption of non-integration, while joint ownership may prevail in the presence of footloose investment.

Keywords: Incomplete contracts; Property rights; Investment spillovers; Joint-control (search for similar items in EconPapers)
JEL-codes: D23 D86 L24 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:145:y:2016:i:c:p:109-113

DOI: 10.1016/j.econlet.2016.05.025

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