Ownership, incentives, and the hold-up problem

• 成果类型: Article
• 署名作者: Baldenius, Tim
• 署名单位: Columbia University
• 刊物名称: RAND JOURNAL OF ECONOMICS
• ISSN/ISSBN: 0741-6261
• DOI: 10.1111/j.1756-2171.2006.tb00016.x
• 发表日期: 2006
• 页码: 276-299
• 关键词: sealed-bid mechanism; incomplete contracts; vertical integration; firm; COMPENSATION; INFORMATION; TECHNOLOGY; benefits; breach; COSTS

摘要

Vertical integration is often proposed as a way to resolve hold-up problems. This ignores the empirical fact that division managers tend to maximize divisional (not firmwide) profit when investing. I develop a model with asymmetric information at the bargaining stage and investment returns taking the form of cash and empire benefits. Owners of a vertically integrated firm will then provide division managers with low-powered incentives to induce them to bargain more cooperatively, resulting in higher investments and overall profit as compared with nonintegration. Vertical integration therefore mitigates hold-up problems even without profit sharing.