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Efficient dissolution of partnerships and the structure of control

Ornelas, Emanuel ORCID: 0000-0001-8330-8745 and Turner, John L. (2007) Efficient dissolution of partnerships and the structure of control. Games and Economic Behavior, 60 (1). pp. 187-199. ISSN 0899-8256

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Identification Number: 10.1016/j.geb.2006.09.004


Past work has shown that asymmetric information and asymmetric ownership affect the possibility of efficient dissolution of partnerships. We show in this paper that control is also a central determinant of the possibility of efficient implementation. We demonstrate this point by analyzing a benchmark case of asymmetric control where a single partner exercises complete control under the status quo partnership. We show that two-person partnerships cannot be dissolved efficiently with any incentive compatible, individually rational mechanism, regardless of the ownership structure, but that this impossibility result can be reversed if the number of partners is sufficiently large. We also show that equal-shares partnerships are not generally the easiest to dissolve when the distribution of control is asymmetric.

Item Type: Article
Official URL:
Additional Information: © 2007 Elsevier
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HD Industries. Land use. Labor
JEL classification: C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships; Contracts and Reputation; Networks
Date Deposited: 22 Jul 2011 15:45
Last Modified: 16 May 2024 00:38

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