Abstract

https://ssrn.com/abstract=2633107
 


 



Optimal Structure and Dissolution of Partnerships


Simon Loertscher


University of Melbourne - Department of Economics

Cédric Wasser


University of Bonn

August 12, 2016


Abstract:     
We study a partnership model with non-identical type distributions and interdependent values. For any convex combination of revenue and social surplus in the objective function, we derive the optimal dissolution mechanism for arbitrary initial ownership. This mechanism involves ironing around worst-off types, which are endogenously determined and typically interior. Given the optimal mechanism, we then determine the optimal initial ownership structures. Equal ownership is always optimal with identical distributions. With non-identical distributions, optimal ownership is typically asymmetric and the identity of the agents with large shares may change with the weight on revenue in the objective. Even fully concentrated ownership is optimal under natural conditions.

Number of Pages in PDF File: 49

Keywords: partnership dissolution, mechanism design, property rights, interdependent values, asymmetric type distributions

JEL Classification: D23, D61, D82


Open PDF in Browser Download This Paper

Date posted: July 20, 2015 ; Last revised: January 7, 2017

Suggested Citation

Loertscher, Simon and Wasser, Cédric, Optimal Structure and Dissolution of Partnerships (August 12, 2016). Available at SSRN: https://ssrn.com/abstract=2633107 or http://dx.doi.org/10.2139/ssrn.2633107

Contact Information

Simon Loertscher
University of Melbourne - Department of Economics ( email )
Melbourne, 3010
Australia
Cédric Wasser (Contact Author)
University of Bonn ( email )
Microeconomics
Lennéstr. 37
Bonn, 53113
Germany
HOME PAGE: http://www.econ2.uni-bonn.de/members-of-the-chair/cedric-wasser
Feedback to SSRN


Paper statistics
Abstract Views: 436
Downloads: 115
Download Rank: 191,614