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http://ssrn.com/abstract=589421
 
 

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Efficient Dissolution of Partnerships and the Structure of Control


Emanuel Ornelas


London School of Economics & Political Science (LSE) - Department of Management; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP)

John L. Turner


University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

June 2005


Abstract:     
Past work has shown that asymmetric information and asymmetric ownership affect the possibility of efficient dissolution of partnerships. We show that \textit{control} is also a central determinant of the possibility of efficient implementation. We demonstrate this point by analyzing a benchmark case of asymmetric control, where a single partner exercises complete control under the status quo partnership. We show that two-person partnerships cannot be dissolved efficiently with any incentive compatible, individually rational mechanism, regardless of the ownership structure, but that this impossibility result can be reversed if the number of partners is sufficiently large. Among other results, we show also that equal-shares partnerships are not generally the easiest to dissolve.

Number of Pages in PDF File: 23

Keywords: Mechanism design, efficient trading, asymmetric control, partnerships

JEL Classification: C72, D82, L14

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Date posted: September 14, 2004  

Suggested Citation

Ornelas, Emanuel and Turner, John L., Efficient Dissolution of Partnerships and the Structure of Control (June 2005). Available at SSRN: http://ssrn.com/abstract=589421 or http://dx.doi.org/10.2139/ssrn.589421

Contact Information

Emanuel Ornelas (Contact Author)
London School of Economics & Political Science (LSE) - Department of Management ( email )
United Kingdom
London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )
Houghton Street
London WC2A 2AE
United Kingdom
John L. Turner
University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )
Athens, GA 30602-6254
United States
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