Partnership dissolution with interdependent values

Philippe Jehiel () and Ady Pauzner

No 275693, Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research

Abstract: We study partnership dissolution when the valuations are interdependent and only one party is informed about the valuations. In contrast with the case of private values (Cramton, Gibbons, and Klemperer 1987), in which efficient trade is feasible whenever initial shares are about equal, there exists a wide class of situations in which full efficiency cannot be reached. In these cases: (1) The subsidy required to restore the Þrst-best is minimal when the entire ownership is allocated initially to one of the parties. (2) Ruling out external subsidies, the second-best welfare is maximized when one of the parties initially has full ownership.

Keywords: Financial Economics; Public Economics (search for similar items in EconPapers)
Pages: 46
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ageconsearch.umn.edu/record/275693/files/1-2006.pdf (application/pdf)

Related works:
Journal Article: Partnership dissolution with interdependent values (2006)
Working Paper: Partnership dissolution with interdependent values (2006)
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:ags:isfiwp:275693

DOI: 10.22004/ag.econ.275693

Access Statistics for this paper

More papers in Foerder Institute for Economic Research Working Papers from Tel-Aviv University > Foerder Institute for Economic Research Contact information at EDIRC.
Bibliographic data for series maintained by AgEcon Search ().