The paper addresses the effect of technological progress on the frontiers of the firm, building on transaction cost theory and agency theory. The model incorporates four types of costs: production, coordination, management, and transaction costs. The market has lower production costs, but higher...

We present a model where the probability distribution over the space of an agent's achievements depends not only on her ability and effort, but also on the goals set for her. The agent chooses her effort according to her utility net of perceived cost of effort. This cost is inversely...

Our objective in this paper is to illustrate and better understand the unavoidable arbitrage between incentives and flexibility in contexts of asymmetric information and to characterize the general features of an appropriate response to this challenge. We show that procedures and institutions in...

In this general equilibrium model, justice and police institutions are treated as a mechanism that induces individuals to extend some desirable productive effort. This determines individual encroachment activities which in turn determine the proportion of aggregate production that fails to be...

Suppose an entrepreneur needs funds from a financier to invest in a risky project whose cost is fixed, and whose return may be high or low. Suppose also that the project's realized return is an information that is private to the entrepreneur. If the amount the entrepreneur pays back to the...

We study in this paper how the technological flexibility choices and equilibrium configurations depend first on the industry characteristics (demand function and cost parameters specific to the multiproduct flexible technology and to the product dedicated technologies) and, second, on the...