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A Dynamic Property Rights Theory of the Firm

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  • Daniel Friesner
  • Robert Rosenman

Abstract

We present a dynamic property rights model of the firm with two types of non-pecuniary spending: one that is financed through capital markets which impacts future firm wealth, and one that does not. Consumption of the latter good is consistent with what has been found in previous models. Our theoretical model indicates that excess non-pecuniary spending may diverge or converge over time, depending on specific management goals and constraints, and regulatory factors. Using a panel of Washington State hospitals, we find evidence that non-pecuniary spending does fluctuate over time and that government policy variables, such as the level of Medicare and Medicaid reimbursement have a statistically significant impact on a firm's excess non-pecuniary spending.

Suggested Citation

  • Daniel Friesner & Robert Rosenman, 2002. "A Dynamic Property Rights Theory of the Firm," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(3), pages 311-333.
    • Handle: RePEc:taf:ijecbs:v:9:y:2002:i:3:p:311-333
    DOI: 10.1080/1357151021000010373
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    References listed on IDEAS

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    Cited by:

    1. Seungchul Lee & Robert Rosenman, 2013. "Reimbursement and Investment: Prospective Payment and For-Profit Hospitals’ Market Share," Journal of Industry, Competition and Trade, Springer, vol. 13(4), pages 503-518, December.
    2. Mulaj, Isa, 2006. "Redefining Property Rights with Specific Reference to Social Ownership in Successor States of Former Yugoslavia: Did it Matter for Economic Efficiency?," MPRA Paper 243, University Library of Munich, Germany.

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