Optimal Structure and Dissolution of Partnerships

Cédric Wasser and Simon Loertscher

VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association

Abstract: We derive the optimal incentive compatible and individually rational mechanisms to reallocate arbitrary given ownership shares among a set of agents. These mechanisms are optimal in the sense that they maximize social surplus of the final allocation subject to the aforementioned constraints and a revenue constraint. We allow for the agents' types to be drawn from non-identical distributions and for interdependent values. Because outside options are type dependent, the critical types for which individual rationality binds must be determined simultaneously with the allocation rule. We show that optimality uniquely pins down the set of critical types, which allows us to fully characterize the optimal mechanisms. Moreover, we find that the value function is Schur-concave in ownership shares when types are identically distributed, so that more symmetric shares are better irrespective of size of the revenue constraint.

JEL-codes: C72 D44 D82 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/113112/1/VfS_2015_pid_694.pdf (application/pdf)

Related works:
Journal Article: Optimal structure and dissolution of partnerships (2019)
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:zbw:vfsc15:113112

Access Statistics for this paper

More papers in VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy from Verein für Socialpolitik / German Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().