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Title:The division of ownership in new ventures PDF Logo
Authors:Demougin, Dominique M.
Fabel, Oliver
Issue Date:2006
Series/Report no.:SFB 649 discussion paper 2006,047
Abstract: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.
Subjects:new ventures
tripartite incentive contract
consulting contract
Document Type:Working Paper
Appears in Collections:SFB 649 Discussion Papers, HU Berlin

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