Risk and transaction costs often provide competing explanations of institutional outcomes. In this paper we argue that they offer opposing predictions regarding the assignment of fixed and variable taxes in a multi-tiered governmental structure. While the central government can pool regional...

A fundamental principle of economics with which Adam Smith begins The Wealth of Nations is the division of labor. Some firms, however, have been pursuing a practice called job rotation, which assigns each worker not to a single and specific task but to a set of several tasks among which he or...