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Efficient resolution of partnership disputes

Author

Listed:
  • Daniel Fershtman
  • Béla Szabadi
  • Cédric Wasser

Abstract

We study efficient resolution of partnership disputes in which, departing from the partnership dissolution literature, dissolution need not be efficient. We characterize which disputes can be resolved efficiently under both one‐ and two‐sided private information, and show that unless a partnership is sufficiently ineffective, efficient resolution is impossible. We propose simple dispute‐resolution procedures implementing the efficient outcome whenever possible. Finally, we characterize second‐best mechanisms when efficient resolution is impossible and private information is one sided.

Suggested Citation

  • Daniel Fershtman & Béla Szabadi & Cédric Wasser, 2023. "Efficient resolution of partnership disputes," RAND Journal of Economics, RAND Corporation, vol. 54(4), pages 543-569, December.
    • Handle: RePEc:bla:randje:v:54:y:2023:i:4:p:543-569
    DOI: 10.1111/1756-2171.12450
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