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Revenue Sharing and Control Rights in Team Production: Theories and Evidence from Joint Ventures

Author

Listed:
  • Chong-En Bai

    (University of Hong Kong)

  • Zhigang Tao

    (University of Hong Kong)

  • Changqi Wu

    (Peking University)

Abstract

We present a model of team production motivated by the stylized facts we found from a sample of 200 joint-venture contracts. The model incorporates the revenue-sharing contract into the property rights and the transaction cost theories of the firm, and it emphasizes the impact of expropriation. Joint control can be optimal as well as unilateral control. Our econometric analysis of the revenue-sharing and control arrangements offers strong support to our model motivated by property rights theory with self-investment but rejects that with cooperative investment. The model motivated by transaction cost theory leaves some important empirical findings unexplained. Our findings reject some existing theories of joint ownership.

Suggested Citation

  • Chong-En Bai & Zhigang Tao & Changqi Wu, 2004. "Revenue Sharing and Control Rights in Team Production: Theories and Evidence from Joint Ventures," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 277-305, Summer.
    • Handle: RePEc:rje:randje:v:35:y:2004:2:p:277-305
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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