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Partnership firms, reputation and human capital

Abstract:

In human capital intensive industries where it is difficult to contract upon the training effort of skilled agents a socially suboptimal level of training may occur. We show how partnership organisations can overcome this problem by tying human and financial capital. Partnerships are opaque so that the willingness of clients to pay depends upon reputation. Partnerships are illiquid and partners must stay with the firm until clients discover their type and update the firm's reputation. This re...

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Publication status:
Published

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Publisher:
University of Oxford Publisher's website
Series:
Department of Economics Discussion Paper Series
Publication date:
2003-01-01
Paper number:
2003-FE-02
Keywords:
Pubs id:
1144290
Local pid:
pubs:1144290
Deposit date:
2020-12-15

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