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Residual Control Rights, Transferable Returns, and Their Implications for Ownership Structure
Prince George’s Community College, Largo, USA
- 1 Prince George’s Community College, Largo, USA
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Abstract
The paper examines the consolidation problem in a model characterized by non-contractible, relationship specific investments, transferable and non-transferable payoffs, and ex post actions that are chosen after the uncertainty in the model is realized. We determine the relationship between the optimal ownership structure and the nature of the relationship specific investments and ex post actions and the degree to which payoffs are transferable with ownership.
KeywordsProperty RightIncomplete ContractRelationship Specific Investments
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