Optimal Structure and Dissolution of Partnerships
Simon Loertscher, Cedric Wasser
Theoretical Economics | Econometric Society | Published : 2019
For a partnership model with general type distributions and interdependent values, we derive the optimal dissolution mechanisms that, for arbitrary initial ownership, maximize any convex combination of revenue and social surplus. The solution involves ironing around typically interior worst-off types, which are endogenously determined. The optimal ownership structures are such that, with identical distributions, equal shares are always optimal. With non-identical distributions, the optimal shares are typically asymmetric; the identity of the agents with large shares may change with the importance of revenue generation; and even fully concentrated initial ownership, and assigning zero shares ..View full abstract
Awarded by Deutsche Forschungsgemeinschaft
We gratefully acknowledge the comments and suggestions by two anonymous referees that have helped us improve the paper considerably. We also want to thank audiences at Aachen, ANU, Berlin, Bonn, Cologne, Dortmund, Duisburg, Duke's Theory Lunchtime Seminar, the Fuqua School of Business, Melbourne, Munich, UNC, Regensburg, the 2014 Econometric Society European Meeting in Toulouse, the 2014 Australasian Meeting of the Econometric Society in Hobart, the 2014 ATE Symposium in Sydney, the 2015 Australasian Economic Theory Workshop at Deakin, the 2015 Stony Brook Game Theory Conference, the 2015 Econometric Society World Congress in Montreal, the 2015 EARIE Conference in Munich, the 2016 Asia-Pacific Industrial Organization Conference in Melbourne, and the 2016 Organizational Economics Workshop in Sydney, as well as Andreas Asseyer, Yeon-Koo Che, Peter Cramton, Robert Gibbons, Bruno Jullien, Thomas Kittsteiner, Andreas Kleiner, Leslie Marx, Benny Moldovanu, Patrick Rey, Klaus Schmidt, Ilya Segal, Michael Whinston, and Steve Williams for helpful comments and discussions. Wasser gratefully acknowledges financial support from theDeutsche Forschungsgemeinschaft through SFB/TR 15. Financial support via a visiting scholar research grant by the Faculty of Business and Economics at the University of Melbourne and by the Samuel and June Hordern Endowment is also gratefully acknowledged.