Vorträge des DIW Berlin
The literature on partnership dissolution generally takes the dissolution decision as given and examines whether dissolution is efficient, i.e., whether the asset is allocated to the partner with the highest valuation. A well-known result is that k + 1-price auctions dissolve a partnership efficiently when the share structure is sufficiently close to equal. In this paper, we endogenize the dissolution decision in an equal-share partnership and show that, if k+1-price auctions are used, inefficient dissolution occurs for speculative reasons. We show that specifying a reserve price for the dissolution auction improves efficiency, while adding a veto right does not help.
Partnership dissolution, k + 1-price auction, Efficiency