search query: @indexterm Investment / total: 2128
reference: 35 / 2128
| Author: | Li, J. Wolfstetter, E. |
| Title: | Partnership dissolution, complementarity, and investment incentives |
| Journal: | Oxford Economic Papers
2010 : JUL, VOL. 62:3, p. 529-552 |
| Index terms: | skills investment incentives |
| Language: | eng |
| Abstract: | Partnerships form in order to take advantage of complementary skills. However, new opportunities may arise that make some partners' skills useless. This paper analyses partnerships that anticipate possible dissolution under the most commonly advised and widely used dissolution rule known as "buy-sell provision". The findings indicate that this rule assures neither ex post efficient dissolution nor ex ante efficient investments. This paper also discusses whether renegotiations, supplementing the buy-sell provision with the right to veto, or allowing the uninformed partner to set the dissolution price may restore efficiency. Finally, this article analyses whether pre-emptive requests for dissolution occur in equilibrium. |
SCIMA