The Division of Ownership in New Ventures
Dominique Demougin () and
Oliver Fabel ()
No SFB649DP2006-047, SFB 649 Discussion Papers from Humboldt University, Collaborative Research Center 649
The current study investigates a tripartite incentive contract between an innovator supplying an intellectual asset, a professional assigned to productive tasks, and a consulting firm specializing in matching ideas and professional skills. A rather simple pure tripartite partnership implements the consultant´s expected profit maximum and maximizes the project`s expected surplus. The liquidity-constrained professional is compensated by receiving a share of one half in the new venture. The consultant´s and the innovator´s shares reflect the relative value of search. However, the consultant´s optimal search effort to find an appropriate production partner is inefficiently low.
Keywords: New ventures; tripartite incentive contract; consulting contract; partnerships (search for similar items in EconPapers)
JEL-codes: M13 M21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-ent
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