Title: Revenue Sharing and Control Rights in Team Production: Theories and Evidence from Joint Ventures
Reference Number: 1057
Publication Date: January 2003

Chong-En Bai
The University of Hong Kong

Zhigang Tao
The University of Hong Kong

Changqi Wu
Peking University

The paper presents 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 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 Property-Rights-Theory motivated model with self investment but rejects that with cooperative investment. The Transaction-Cost-Theory motivated model leaves some important empirical findings unexplained. Our findings reject some existing theories of joint ownership.

Published in Rand Journal of Economics 35:2 (2004), pp. 277-305.

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Last modified: 01/24/2007