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...

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...

The analysis of organizational change and particularly of its impacts on incentives is neither simple nor easy. We consider here four contexts (choosing a level of decentralization, choosing the level of responsibility for pollution damage, choosing a level of technological or organisational...

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...

This paper revisits the tragedy of the commons when agents have different capabilities in both production and encroachment activities, and can allocate their time between them. Under fairly general assumptions on production and encroachment technologies, an individual's expected income is convex...

Two firms produce a good with a horizontal and a vertical characteristic called quality. The difference in the unobservable quality levels determines how the firms share the market. We consider two scenarios: In the first one, firms disclose quality; in the second one, they send costly signals...

We provide an experimental analysis of competitive insurance markets with adverse selection. Our parameterized version of the lemons' model (Akerlof 1970) in the insurance context predicts total crowding out of low-risks when insurers offer a single full insurance contract. The therapy proposed...

We analyze optimal trading mechanisms in environments where each trader owns some units of a good to be traded and may be either a seller or a buyer, depending on the realization of privately observed valuations. First, the concept of virtual valuation is extended to ex ante unidentified...

This paper examines how different rules for presentation of evidence affect verdicts in regulatory hearings and the welfare and efficiency properties these procedures exhibit. The hearing is modeled as a game of imperfect information in which the respondent is privately informed about validity...