Ownership, access and sequential investment

Maxim Mai, Vladimir Smirnov and Andrew Wait ()

No 2011-09, Working Papers from University of Sydney, School of Economics

Abstract: We extend the property-rights framework to allow for: a separation of the ownership rights of access and veto; and sequential investment. Parties investing first (ex ante) do so before contracting is possible. Parties that invest second (ex post) can contract on (at least some) of their investment costs. Along with this cost-sharing effect, the incentive to invest is affected by a strategic effect generated by sequential investment. Together these effects can overturn some of the predictions of the property-rights literature. For example, the most inclusive ownership structure might not be optimal, even if all investments are complementary.

Keywords: property rights; access; veto; firm organization; sequential investment; holdup (search for similar items in EconPapers)
Date: 2011-10
New Economics Papers: this item is included in nep-bec, nep-ipr, nep-pr~ and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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http://hdl.handle.net/2123/7862

Related works:
Journal Article: Ownership, Access, and Sequential Investment (2014)
Journal Article: Ownership, Access, and Sequential Investment (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:syd:wpaper:2123/7862

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