This paper investigates parole decisions when the offender may commit a second crime after having been set free. A convicted person is discharged earlier if the cost of the crime declines or the cost of the imprisonment increases. More dangerous offenders will be dismissed later unless the...

Innovative projects can be carried out by small entrepreneurial partnerships or within large industrial firms. We investigate the effects of fostering the former by organizing an quot;incubatorquot; to improve the matching of individuals in teams. The respective equilibrium then entails a larger...

We analyze a Tullock-type takeover contest between two CEOs. To deter wasteful influence activities in shareholder optimum, the parachute compensates the (potentially) foregone earnings of the contestant whose incentives to invest in such activities are strongest. Therefore, the parachute is...

<title>Abstract</title> <italic>Fair employment policies constrain employee selection: specifically, applicants’ professional experience can be a substitute for formal education. However, reflecting firm-specific job requirements, this substitution rule applies less strictly to applicants from outside the firm....</italic>

The O-Ring theory provides a framework for analyzing the effects of team production on the emergence of firms in the New Economy. Given risk-aversion of the potential team members, the productive advantage of perfect ability matching in teams suffices to establish an equilibrium which separates...