@article{94eee0e5ae1a4a18b27139bc03411dca,
title = "Ex post inefficiencies in a property rights theory of the firm",
abstract = "Private information can lead to inefficient bargaining between managers. I develop a property rights theory of the firm to analyze the optimal ownership structure that minimizes this bargaining inefficiency. I first show that a change in the ownership structure that reduces the managers' aggregate disagreement payoff increases the probability that they realize efficient trades, but also increases the cost of disagreement and can lead them to trade {"}too often.{"} I then show that joint ownership is optimal if the managers' expected gains from trade are large and that either integration or nonintegration is optimal if the expected gains from trade are small.",
author = "Niko Matouschek",
note = "Funding Information: This article is based on Chapter 2 of my Ph.D. dissertation and has previously been circulated under the title ``Information and the Optimal Ownership Structure of Firms.'' I am particularly grateful to Leonardo Felli, Oliver Hart, John Moore, and Andrea Prat for their help and advice. I would also like to thank Heski Bar-Isaac, Hongbin Cai, Jim Dana, Antoine Faure-Grimaud, Catherine de Fontenay, Robert Gibbons, Marcus Hagedorn, Marco Otta-viani, Michele Piccione, Paolo Ramezzana, S{\"o}nje Reiche, Fr{\'e}d{\'e}ric Robert-Nicoud, Kathy Spier, Scott Stern, Jonathan Thomas, and Richard Walker as well as seminar participants at ESSET 2000 in Gerzensee, the Young Economist 2000 conference in Oxford, and the Stockholm School of Economics for very useful comments and discussions. All remaining errors are, of course, my own. Financial support by the Centre for Economic Performance, the London School of Economics, STICERD, and the Stockholm School of Economics is gratefully acknowledged.",
year = "2004",
month = apr,
doi = "10.1093/jleo/ewh026",
language = "English (US)",
volume = "20",
pages = "125--147",
journal = "Journal of Law, Economics, and Organization",
issn = "8756-6222",
publisher = "Oxford University Press",
number = "1",
}