The Division of Ownership in New Ventures
Demougin, Dominique
Fabel, Oliver
The current study investigates a tripartite incentive contract between an innovator supplying an intellectual asset, a professional assigned to productive tasks, and a consulting firm specializing in matching ideas and professional skills. A rather simple pure tripartite partnership implements the consultant´s expected profit maximum and maximizes the project`s expected surplus. The liquidity-constrained professional is compensated by receiving a share of one half in the new venture. The consultant´s and the innovator´s shares reflect the relative value of search. However, the consultant´s optimal search effort to find an appropriate production partner is inefficiently low.
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Is Part Of Series: Sonderforschungsbereich 649: Ökonomisches Risiko - 47, SFB 649 Papers, ISSN:1860-5664
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