Transaction costs and the property rights approach to the theory of the firm
Please always quote using this URN: urn:nbn:de:bvb:20-opus-188042
- The standard property rights approach is focused on ex ante investment incentives, while there are no transaction costs that might restrain ex post negotiations. We explore the implications of such transaction costs. Prominent conclusions of the property rights theory may be overturned: A party may have stronger investment incentives when a non investing party is the owner, and joint ownership can be the uniquely optimal ownership structure. Intuitively, an ownership structure that is unattractive in the standard model may now be desirable,The standard property rights approach is focused on ex ante investment incentives, while there are no transaction costs that might restrain ex post negotiations. We explore the implications of such transaction costs. Prominent conclusions of the property rights theory may be overturned: A party may have stronger investment incentives when a non investing party is the owner, and joint ownership can be the uniquely optimal ownership structure. Intuitively, an ownership structure that is unattractive in the standard model may now be desirable, because it implies large gains from trade, such that the parties are more inclined to incur the transaction costs.…
Author: | Daniel Müller, Patrick W. Schmitz |
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URN: | urn:nbn:de:bvb:20-opus-188042 |
Document Type: | Journal article |
Faculties: | Wirtschaftswissenschaftliche Fakultät / Volkswirtschaftliches Institut |
Language: | English |
Parent Title (English): | European Economic Review |
Year of Completion: | 2016 |
Volume: | 87 |
Pagenumber: | 92-107 |
Source: | European Economic Review (2016) 87, 92.107. https://doi.lorg/10.1016/j.euroecorev.2016.04.013 |
DOI: | https://doi.org/10.1016/j.euroecorev.2016.04.013 |
Dewey Decimal Classification: | 3 Sozialwissenschaften / 33 Wirtschaft / 330 Wirtschaft |
Tag: | Incomplete contracts; Joint ownership; Property rights approach; Transaction costs; Vertical integration |
Release Date: | 2020/06/17 |
Licence (German): | CC BY-NC-ND: Creative-Commons-Lizenz: Namensnennung, Nicht kommerziell, Keine Bearbeitungen 4.0 International |