Endogenous property rights and the nature of the firm
Bibliographic Data
| ID | 9726771 |
|---|---|
| Authors | Carmine Guerriero (0000-0003-4046-1082, University of Bologna, corresponding author), Giuseppe Pignataro (0000-0002-1972-0572, University of Bologna) |
| Year | 2024 |
| Volume | 91 |
| Issue | 362 |
| Pages | 383-413 |
| Publication date | 2024-04-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | Wiley (PUBLISHER • GB) |
| DOI | 10.1111/ecca.12506 |
| OpenAlex | W4389477704 |
| Language | EN |
| Citations received | 1 |
| References cited | 32 |
While focusing on residual control rights, the property rights theory of the firm overlooks that the legal protection of each party's input shapes its ex post bargaining power. To evaluate this issue, we assume that the property rights on the inputs are selected by a legislator to maximize full investment and, conditional on this goal being reached, minimize inefficient deviations to intermediate investment profiles. Our model delivers three key novel implications. First, the strength of a party's property rights is related negatively to the strength of its residual control rights and determines entirely its ex ante incentives to invest. Second, the legislator tends to protect a firm less when its default payoff under its preferred ownership structure is larger and when its contribution to the relationship is the greatest. Finally, the extent of integration falls weakly with the default payoffs and displays an inverted U‐shaped link with the intensity of the downstream firm's investment activity. Crucially, these predictions are consistent with the relationships between proxies for the strength of the downstream firms' property rights and firms' presence in the value chain, and measures of asset specificity and R&D intensity for 119 countries observed over the 2006–18 period
Asset (computer security) · Bargaining power · Business · Economics · Incentive · Investment (military) · Law and economics · Legislation · Legislator · Market economy · Microeconomics · Opportunism · Order (exchange) · Politics · Property (philosophy) · Property rights · Corporate Finance and Governance · Finance · Law · Law, Economics, and Judicial Systems · Merger and Competition Analysis
Firms, Contracts, and Financial Structure
Perfect Equilibrium in a Bargaining Model
Endogenous Political Institutions
Reexamination of the perfectness concept for equilibrium points in extensive games
Transaction Cost Economics
Property Rights and the Nature of the Firm
Global Sourcing
The Costs and Benefits of Ownership
The Nature of the Firm
| Unique citing works | 1 |
|---|---|
| Citations per year | 1 |
| Citation span | 2025 - 2025 (1) |
| Citation velocity | recent |
| Highly cited | No |
| Citation types | Neutral: 1 |