I estimate a matching model of partnerships among startup owners to quantify therelative importance of productivity gain, ﬁnancing gain, and moral hazard to businesspartnership formation. The productivity gain accounts for 85% of the gain from theobserved partnerships. For partners in the ﬁrst quintile of the wealth distribution, however, ﬁnancing accounts for 85% of the gain. The moral hazard cost corresponds to 39%of the entire gain from partnerships. A government-guaranteed loan program speciﬁcallytargeting partnership ﬁrms does not increase the number of partnership ﬁrms, and isineﬀective in improving match quality among partners.
Partnership, productivity, ﬁnancial constraints, moral hazard, entrepreneurship, matching
Econometrics | Entrepreneurial and Small Business Operations | Finance
Why form business partnerships?. (2017). 1-76. Research Collection School Of Economics.
Available at: http://ink.library.smu.edu.sg/soe_research/2071
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