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The Secret Of Growth Is Financing Secrets: Corporate Law And Growth Economics, Robert D. Cooter, Hans Bernd Schaefer
The Secret Of Growth Is Financing Secrets: Corporate Law And Growth Economics, Robert D. Cooter, Hans Bernd Schaefer
Robert Cooter
Innovative businesses unite capital and new ideas, which requires overcoming the double trust dilemma -- investors fear losing their wealth and innovators fear losing their ideas. To overcome this dilemma, 17th century spice traders invented the joint stock company with an essential feature of modern corporations: entitlements to marketable shares of future profits. Using the corporate form, innovative business ventures can often be organized so that innovators expect to earn more from their share of profits than from stealing the investors’ money, and investors expect to earn more by preserving the company’s secrets than disseminating them. The corporation thus provides …
Anti-Sharing As A Theory Of Partnerships And Firms, Robert D. Cooter, Roland Kirstein
Anti-Sharing As A Theory Of Partnerships And Firms, Robert D. Cooter, Roland Kirstein
Robert Cooter
Anti-Sharing may improve the efficiency of teams. The Anti-Sharer collects a fixed payment from all team members; he receives the actual output and pays out its value to them. However, if a team members assumes the role of an "internal" Anti-Sharer, he will be unproductive in equilibrium. Hence, internal Anti-Sharing fails to yield the first-best outcome. External Anti-Sharing may induce the team members to choose efficient effort. The paper presents possible applications of Anti-Sharing: while internal Anti-Sharing may provide an explanation for the existence of senior (or managing) partners, external Anti-Sharing leads to a new theory of the incorporated firm.