Asymmetric partnerships

We study asymmetric partnerships and show that efficient dissolution is possible if critical types (where participation constraints bind) are equal. Ownership structures guaranteeing equal critical types always exist, but can be extremely unequal.

► We derive conditions for efficient dissolution of asymmetric partnerships. ► We show that property rights exist that allow efficient dissolution to exist, but can be extremely unequal. ► The agent that most likely has the highest valuation for an asset should initially own a bigger share of it. ► We discuss implications of these findings for the design of partnerships and joint ventures.