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

By David de Meza and Ben Lockwood


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

Topics: HB Economic Theory
Publisher: Oxford University Press
Year: 1998
DOI identifier: 10.1162/003355398555621
OAI identifier:
Provided by: LSE Research Online
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