We develop a model of vertical mergers with open auctions upstream. This setting may be appropriate for industries where inputs are procured via auction-like “requests for proposal.” For example, Drennan et al (2020) reports that a model of this type was used during the CVS-Aetna merger...

This chapter addresses the history, use and significance of the term transaction costs. Few words in the economic language have been more abused or fought over and this is shown to result from the emergence of two distinct definitions and uses. The ‘Neoclassical’ definition rests on the...

Based on measurements among 332 owner-managers (hog farmers), we investigate how the global shape of the utility function (i.e., S-shaped versus concave or convex over the total range of outcomes) relates to choice behavior. We find that the global shape of the utility function differs across...

If the price system is superior to central planning, why do firms exist with sub-economies that are very large, approximating small capitalist economies? In a principal-agent setting we compare a market, in which two principal-agent pairs trade, to a corporation in which a single principal hires...

We analyze the effectiveness of consumer financial regulation by considering the 2009 Credit Card Accountability Responsibility and Disclosure (CARD) Act. We use a panel data set covering 160 million credit card accounts and a difference-in-differences research design that compares changes in...

Productivity is the main factor holding back long-term economic growth in Italy. Since the second half of the 1990s, productivity growth has been feeble both by historical standards and compared with the other main euro area countries. Understanding the reasons for such a performance and finding...

Berle and Means's analysis of the corporation - in particular, their view that those in control are not the owners of the corporation - raises questions about actions that corporations take to counter concerns regarding management's influence. What mechanisms, if any, do corporations implement...

To the uninitiated, transaction costs are often mysterious at best and dubious at worst. Even among economists who use the term often, there are misunderstandings as to what transaction costs actually are. I argue that much of the transaction cost "image" is caused by the lack of a workable...

In standard models of contracts, efficient incentives require the promisor to pay damages for non-performance and the promisee to receive no damages. To give efficient incentives to both parties, we propose a novel contract requiring the promisor to pay damages for nonperformance to a third...

We analyze the impact of a Web-based trading channel on the trading activity in two corporate 401(k) plans. Using detailed data on about 100,000 participants, we compare trading growth in these firms to growth for a sample of firms without a Web channel. After 18 months of access, the inferred...