Stephanie Rosenkranz and Patrick W. Schmitz
Schmalenbach Business Review/Zeitschrift für betriebswirtschaftliche Forschung, Vol. 56 (1), 2004, 72-89.
Abstract. A well-known result of the property rights approach based on incomplete contracts as outlined by Hart (1995) says that all ownership structures lead to underinvestment and that joint ownership of an asset cannot be optimal. In cases where only the total amount invested matters, it turns out that these conclusions are only true in the one-shot case. If the parties can invest and generate a surplus twice, then joint ownership may imply first-best investments in the first stage and can thus be the optimal ownership structure.
The working paper version is available for download (CEPR Discussion Paper 2679).
Another working paper version is available for download at SSRN.
The paper is available for download.