Abstract
I consider the non-cooperative partnership game of Holmström (1982), except that inputs are strict complements instead of substitutes. I show that for such partnerships there exists a balanced sharing rule that induces efficient production as an equilibrium outcome. The sharing rule is simple, intuitive, satisfies limited liability, and moreover allows for any distribution of social surplus among the partners. This latter property stands in contrast to the sharing rule suggested by Legros & Matthews (1993) and Vislie (1994) to solve the Leontief partnership problem. I also derive results in perturbed versions of the deterministic model. When noise is added to individual output, free-riding is inevitable, while it is possible to mitigate the free-rider problems when noise instead is added to joint output.
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