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Reputation And The Allocation Of Ownership

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  • Maija Halonen

    (University of Bristol)

Abstract

The allocation of ownership matters even in long--term relationships. Ownership structure is chosen to encourage co--operation. The optimal ownership structure of the static game restricts the gain from deviation to be the lowest but also the punishment will be minimal. The worst ownership structure of the one--shot game is good in the repeated setting because it provides the highest punishment but bad because the gain from deviation is also the highest. When investment is inelastic, joint ownership is optimal. Allowing for renegotiation of ownership structure softens the punishment under joint ownership but it is still optimal for a wide parameter range. Copyright 2002 Royal Economic Society

Suggested Citation

  • Maija Halonen, 2002. "Reputation And The Allocation Of Ownership," Economic Journal, Royal Economic Society, vol. 112(481), pages 539-558, July.
    • Handle: RePEc:ecj:econjl:v:112:y:2002:i:481:p:539-558
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    JEL classification:

    • J1 - Labor and Demographic Economics - - Demographic Economics

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