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Revenue Sharing and Control Rights in Team Production: Theories and Evidence from Joint Ventures.*

Chong-En Bai, Zhigang Tao () and Changqi Wu ()

William Davidson Institute Working Papers Series from William Davidson Institute at the University of Michigan

Abstract: This paper presents a model of the joint venture that is grounded in the stylized facts we found from a sample of 200 joint venture contracts. The model incorporates the revenue-sharing contract into the incomplete contract frameworks of Grossman-Hart-Moore Property Rights Theory and the Transaction Cost Theory of the firm, and emphasizes the impact of expropriation. Joint control can be optimal as well as unilateral control. Our econometric analysis of the revenue-sharing and control arrangements o?ers strong support to our Property-Rights-Theory motivated model with self investment but rejects that with cooperative investment. The Transaction-Cost-Theory motivated model leaves some important empirical findings unexplained. Our findings also reject some of the existing theories of joint ownership.

Keywords: Joint Ventures; Control Right; Revenue-Sharing Contracts; Expropriation; Theory of the Firm (search for similar items in EconPapers)
JEL-codes: D23 L14 L23 (search for similar items in EconPapers)
Pages: 73 pages
Date: 2003-06-20
New Economics Papers: this item is included in nep-tra
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Citations: View citations in EconPapers (2) Track citations by RSS feed

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http://deepblue.lib.umich.edu/bitstream/2027.42/39948/2/wp563.pdf

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Journal Article: Revenue Sharing and Control Rights in Team Production: Theories and Evidence from Joint Ventures (2004)
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Persistent link: https://EconPapers.repec.org/RePEc:wdi:papers:2003-563

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