Cláusulas de terminación y liquidación en las empresas conjuntas (joint-venture)
Specifically, by deciding which side of the market each of the claimants for the asset will be on at random after their reports of values, the mechanism achieves an ex post and ex ante fair allocation. As in the complete information version of the divide and choose mechanism, biding arbitration leaves each claimant indifferent about which side of the market they are on, thus resulting in truthful revelation as a weakly dominant strategy
by not including the clause, partners worsen their own prospects in the event of failure of the project: not only they do not succeed in pursuing their project but they also generate a costly bargaining process due to litigation before the Court. This induces partners to exert larger efforts (non contractible investments). In other words, the absence of a termination clause works as a “discipline device” that alleviates the hold-up problem.