Control rights allocation in real estate joint development

Real estate joint development is an activity composed of several enterprises with complementary advantages (at least one of them have the qualification of real estate development) driven by some opportunity. The long-term, complexity, market floatability and the asymmetric information led to incomplete contracts in real estate joint development. The control rights allocation must be very important, because the actual controller may damage the interests of another party. This paper develops a theoretical model based on the revenue sharing contracts to study control rights allocation between two partners within narrow real estate joint development. The results show that the control rights and revenue sharing rights must be rationally allocated to ensure the stability. Majority control is the optimal allocation if the probability of acquiring private benefits is relatively small, while shared control may be better if the probability is relatively large.