2004), “Revenue sharing and control rights in team production: Theories and evidence from joint ventures

This paper presents a model of the joint venture that is grounded in the stylized facts we found from a sample of 200 joint venture contracts. The model incor-porates the revenue-sharing contract into the incomplete contract frameworks of Grossman-Hart-Moore Property Rights Theory and the Transaction Cost Theory of the firm, and emphasizes the impact of expropriation. Joint control can be opti-mal as well as unilateral control. Our econometric analysis of the revenue-sharing and control arrangements offers strong support to our Property-Rights-Theory mo-tivated model with self investment but rejects that with cooperative investment. The Transaction-Cost-Theory motivated model leaves some important empirical findings unexplained. Our findings also reject some of the existing theories of joint ownership