Abstract

http://ssrn.com/abstract=1725483
 
 

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Risk, Incentives and Contracts: Partnerships in Rio De Janeiro 1870-1891


Ran Abramitzky


Stanford University - Department of Economics

Zephyr Frank


affiliation not provided to SSRN

Aprajit Mahajan


Stanford University

December 14, 2010


Abstract:     
We construct an individual-level dataset of partnership contracts in late nineteenth century Rio de Janeiro to study the determinants of contract terms. We show that partners with limited liability contributed more capital and received lower draws for private expenses and lower profit shares than their unlimited partners. Unlimited partners in turn received higher-powered incentives when they contracted with limited partners than when they contracted with unlimited partners. A reform that changed the relative bargaining power further improved the terms of unlimited partners in limited firms. These findings highlight the roles of risk, incentives, and bargaining power in shaping contracts.

Number of Pages in PDF File: 30

Keywords: Partnerships, Brazil

JEL Classification: J4, N26, N86

working papers series


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Date posted: December 16, 2010 ; Last revised: July 12, 2011

Suggested Citation

Abramitzky, Ran and Frank, Zephyr and Mahajan, Aprajit, Risk, Incentives and Contracts: Partnerships in Rio De Janeiro 1870-1891 (December 14, 2010). Available at SSRN: http://ssrn.com/abstract=1725483 or http://dx.doi.org/10.2139/ssrn.1725483

Contact Information

Ran Abramitzky
Stanford University - Department of Economics ( email )
Stanford, CA 94305
United States
Zephyr Frank
affiliation not provided to SSRN ( email )
Aprajit Mahajan (Contact Author)
Stanford University ( email )
Stanford, CA 94305
United States
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References:  44

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