We examine an incentive transfer scheme in an executive agency system when there are both marketable and nonmarketable public services. We show that because of the incentive transfer scheme, which contributes to the elimination of a government's budget deficit, social welfare is higher in the...

In our model, an entrant has two effective strategies for profit maximization: collaboration with incumbents and location choice. We analyze the effect of allowing an entrant the opportunity to collaborate with incumbents on its location choice. First, we show that when collaboration requires...

This paper examines the agency cost of winner-picking in multidivision firms and uses explicit incentive contracts to analyze the interaction between corporate headquarters´ investment and incentive policies. Winner-picking, i.e., the efficient reallocation of scarce resources in an internal...

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...