In certain industries, sales agent contracts include provisions for sales commissions and clawbacks of commissions if clients are not retained. We show that contracts with these features arise in environments having up-front selling costs recouped from ongoing sales; heterogeneous customers;...

This paper derives firm boundaries as the outcome of an equilibrium coordination mechanism. The analysis is premised on the notion that efficient production and distribution are achieved through a mechanism that coordinates three basic activities: i) input acquisition, ii) production, iii)...