Econometrica Vol. 55 No. 3 1987
Dissolving a Partnership Efficiently
Abstract
Several partners jointly own an asset that may be traded among them. Each partner has a valuation for the asset; the valuations are known privately and drawn independently from a common probability distribution. We characterize the set of all incentive-compatible and interim-individually-rational trading mechanisms, and give a simple necessary and sufficient condition for such mechanisms to dissolve the partnership ex post efficiently. A bidding game is constructed that achieves such dissolution whenever it is possible. Despite incomplete information about the valuation of the asset, a partnership can be dissolved ex post efficiently provided no single partner owns too large a share; this contrasts with Myerson and Satterthwaite's result that ex post efficiency cannot be achieved when the asset is owned by a single party.
- DOI
- 10.2307/1913602
- Volume
- 55
- Issue
- 3
- Pages
- 615
- Sources
- bibtex:phds-export.bib crossref openalex