A large theoretical literature focuses on the question: What determines firms' boundaries? Recently, Garicano and Santos and Holmstrom and Milgrom have proposed theories in which firms' boundaries reflect the division of labor across individuals. This paper discusses strategies for generating...

We use a simplified version of Garicano and Rossi-Hansberg (2005) to understand the impact of improvements in communications technology at the turn of the twentieth century on wages and organization. Improvements in communication technology allow individuals of different skills to abandon...

When should expertise be shared in markets and when in firms? Knowledge exchanges in the market involve less information about the quality of the provider's expertise, but facilitate good utilization of experts' knowledge. In a firm, management holds soft information about individuals' expertise...