On surplus-sharing in partnerships

Kıbrıs, Özgür and Kıbrıs, Arzu (2016) On surplus-sharing in partnerships. Social Choice and Welfare, 47 (1). pp. 89-111. ISSN 0176-1714 (Print) 1432-217X (Online)

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Official URL: http://dx.doi.org/10.1007/s00355-015-0947-7


For investment or professional service partnerships (in general, for partnerships where measures of the partners' contributions are available), we consider a family of partnership agreements commonly used in real life. They allocate a fixed fraction of the surplus equally and the remains, proportional to contributions; and they allow this fraction to depend on whether the surplus is positive or negative. We analyze the implications of such partnership agreements on (i) whether the partnership forms in the first place, and if it does, (ii) the partners' contributions as well as (iii) their welfare. We then inquire which partnership agreements are productively efficient (i.e. maximizes the partners' total contributions) and which are socially efficient, (i.e. maximizes the partners' social welfare as formulated by the two seminal measures of egalitarianism and utilitarianism).

Item Type:Article
Uncontrolled Keywords:partnership agreements, surplus-sharing, noncooperative contribution choice, proportional surplus shares, equal surplus shares, productive efficiency, egalitarian social welfare, utilitarian social welfare
Subjects:H Social Sciences > HB Economic Theory
ID Code:30952
Deposited By:Özgür Kıbrıs
Deposited On:15 Nov 2016 15:44
Last Modified:28 Apr 2020 13:55

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