Asset Ownership and Contractibility of Interaction

Andreas Roider

RAND Journal of Economics, 2004, vol. 35, issue 4, 787-802

Abstract: In a property-rights framework, I study how organizational form and quantity contracts interact in generating investment incentives. The model nests standard property-rights and hold-up models as special cases. I admit general message-dependent contracts but provide conditions under which noncontingent contracts are optimal. First, the article contributes to the foundation of the property-rights theory: I characterize under which circumstances its predictions are correct when trade is contractible. Second, I study how the optimal use of the incentive instruments depends on the environment. Finally, the model offers a new perspective on the classic Fisher Body case and produces implications that are empirically testable.

Keywords: Organizational Behavior; Transaction Costs; Property Rights Capital Budgeting; Investment Policy; cost of capital Transactional Relationships; Contracts and Reputation; Networks Contracts; Investment; Property Rights; Property (search for similar items in EconPapers)
JEL-codes: D23 G31 L14 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (22)

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Working Paper: Asset Ownership and Contractability of Interaction (2002)
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