Referierte Aufsätze Web of Science
Georg Gebhardt
In: Journal of the European Economic Association 11 (2013), 1, 201-227
In this paper, I test the most basic prediction of Grossman and Hart (1986, The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration. Journal of Political Economy, 691-719): allocations of asset ownership that expose a party to ex-post expropriation reduce this party’s exante relationship-specific investments. In the empirical context of the German housing market, I find that relationship-specific investments, such as bathroom renovations, are more frequent if the occupant is protected against expropriation because he owns his home. To avoid the endogeneity of the homeownership allocation, I rely on the natural experiment of the German reunification: under the communist regime, ownership existed but was economically meaningless; yet after reunification,ownership unexpectedly reacquired legal force. (JEL: D23, D86, C23).