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Equal sharing rules in partnerships


Bartling, Björn; Von Siemens, Ferdinand A (2010). Equal sharing rules in partnerships. Journal of Institutional and Theoretical Economics JITE, 166(2):299-320.

Abstract

Partnerships are the prevalent organizational form in many industries. Profits are most frequently shared equally among the partners. The purpose of our paper is to provide a rationale for equal sharing rules. We show that with inequity averse partners the equal sharing rule is the unique sharing rule that maximizes the partners' incentives to exert effort. We further show that inequity aversion can enhance efficiency in partnerships of given size, but that it can also cause partnerships to be inefficiently small.

Abstract

Partnerships are the prevalent organizational form in many industries. Profits are most frequently shared equally among the partners. The purpose of our paper is to provide a rationale for equal sharing rules. We show that with inequity averse partners the equal sharing rule is the unique sharing rule that maximizes the partners' incentives to exert effort. We further show that inequity aversion can enhance efficiency in partnerships of given size, but that it can also cause partnerships to be inefficiently small.

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15 citations in Web of Science®
16 citations in Scopus®
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55 downloads since deposited on 02 Nov 2010
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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Language:English
Date:June 2010
Deposited On:02 Nov 2010 13:29
Last Modified:05 Apr 2016 14:24
Publisher:Mohr Siebeck
ISSN:0932-4569
Publisher DOI:https://doi.org/10.1628/093245610791342987

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