Determinants of Asset Ownership: A Study of the Carpentry Trade

Posted: 18 Dec 2003

See all articles by Duncan Simester

Duncan Simester

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Birger Wernerfelt

Massachusetts Institute of Technology (MIT) - Sloan School of Management

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Abstract

We use a dataset describing ownership of productive assets in the carpentry trade to evaluate several factors influencing the allocation of asset ownership between an employer and his employees. The findings suggest that the allocation involves a tradeoff between two incentive effects influencing how the employee uses the asset and what the employer decides it should be used for. In particular, the allocation of ownership hinges on whether an asset is easily lost or stolen, which favors employee ownership, and whether the employer's task assignment affects the asset's depreciation, which favors employer ownership. There is also evidence that more expensive assets and assets that are shared by more than one employee are more likely to be owned by the employer. The results suggest that a general theory of asset ownership should be able to account for at least these effects.

Keywords: Integration, theory of the firm, ownership,assets

JEL Classification: D2, L2

Suggested Citation

Simester, Duncan and Wernerfelt, Birger, Determinants of Asset Ownership: A Study of the Carpentry Trade. Review of Economics and Statistics, 2004. Available at SSRN: https://ssrn.com/abstract=479781

Duncan Simester (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

Management Science
Cambridge, MA 02142
United States
617-258-0679 (Phone)
617-258-7597 (Fax)

Birger Wernerfelt

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States
617-253-7192 (Phone)
617-258-7597 (Fax)

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