We explore the implications of altruism in family firms for the allocation of decision-making rights. Our results suggest that centralization occurs in a broader range of circumstances in family than in nonfamily firms, consistent with empirical evidence. We show that an agent might remain in a...

Corporate actors differ from individuals in that it may be possible to observe the formation of the corporate will from outside, and to influence its formation. This feature can be exploited by regulators. One technique is inducing corporate actors to hire an interface actor, representing the...

In a model of Coasean bargaining over externalities it is described how agents can manipulate their opponent's reservation utility by strategic actions at a pre-bargaining stage, such as the choice of a pollution technology. This may imply  misallocation of resources, and opening up trade...

This paper explores the location decisions of final-good producers under imperfect contract enforcement. The legal systems'; quality is measured by the contracting environment in each country. The final producers'; location decisions create different outcomes in terms of efficiency. We find one...

We experimentally analyze whether being exposed to different incentive schemes induces subjects to change their behavior. In particular, we investigate the effect on trust and trustworthiness measured by conducting an investment game. We implement two simple incentive schemes modeling the basic...

If an enterprise is restructured prior to privatization, underinvestment in restructuring is very likely. This is a special hold-up problem in privatization. Efficient restructuring can be attained if it is performed by either the buyer or a cash-revenue maximizing privatization agency....

This paper analyzes, in a setup where only the control over actions is contractible, the rationale for delegation. An organization must take two decisions. The payoffs are affected by a random parameter, and only the agent knows its realization. If the principal delegates the control over the...

The thesis by HALLWOOD [1994] is compactly restated, showing that most of Love's points are either already encompassed, or, are useful extensions of it. Love's idea that production cost differences between firms are necessarily caused by transaction costs is rejected, as differences between...

This paper compares benefits and costs related to hierarchical and decentralized organizations in an agency framework. We show that the relative efficiency of hierarchy diminishes in contexts with asymmetric information. When effort is not observable, performance-related pay is required in order...

The paper develops a theory of ownership structure based on the notion that corporate control and secondary market liquidity are not perfectly compatible with eath other. We analyze the tradeoff between these two objectives for two different ownership structures: the privately held firm, which...