Abstract
In this paper the effects of selling assets are examined in a property rights model à la Grossmann, Hart and Moore. The possibility of selling an asset gives its owner a bargaining tool which can strengthen his bargaining power under certain circumstances. This offers a form of protection against opportunistic behavior in the hold-up problem, which has not yet been considered in the literature on property rights. With this model it is possible to give a rationale for unconditional joint ownership. Moreover, an explanation for privatization, outsourcing and the existence of “passive” outside owners can be derived within the model.
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Lilienfeld-Toal, U. Asset Ownership and the Threat to Sell. JEcon 80, 1–25 (2003). https://doi.org/10.1007/s00712-002-0608-z
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DOI: https://doi.org/10.1007/s00712-002-0608-z