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Does asset ownership always motivate managers? The property rights theory of the firm and outside options

de Meza, David and Lockwood, Ben (1998) Does asset ownership always motivate managers? The property rights theory of the firm and outside options. Quarterly Journal of Economics, 113 (2). pp. 361-386. ISSN 0033-5533

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Abstract

This paper studies the Grossman-Hart-Moore (GHM) “property rights” approach to the theory of the firm under alternating-offers bargaining. When managers can pursue other occupations while negotiating over the division of the gains from cooperation, the GHM results obtain. If taking the best alternative job terminates bargaining, outcomes are very different. Sometimes an agent with an important investment decision should not own the assets he works with; sometimes independent assets should be owned together; sometimes strictly complementary assets should be owned separately.

Item Type: Article
Official URL: http://qje.oxfordjournals.org/
Additional Information: © 1998 The President and Fellows of Harvard University and the Massachusetts Institute of Technology
Library of Congress subject classification: H Social Sciences > HB Economic Theory
Sets: Research centres and groups > Managerial Economics and Strategy Group
Departments > Management
Collections > Economists Online
Rights: http://www.lse.ac.uk/library/usingTheLibrary/academicSupport/OA/depositYourResearch.aspx
Date Deposited: 09 May 2011 13:22
URL: http://eprints.lse.ac.uk/35864/

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