This paper develops a novel theory of capital mis-allocation within firms that stems from managers’ empire building and informational frictions within the organization. Introducing an internal capital market into a two-factor model of multi-segment firms, we show that international competition...

We introduce a dynamic model that investigates the persistence and evolution of elite-dominated societies, where inherited political capital determines one's social standing. Our analysis highlights the critical role of the distribution of exit options in the evolution of political inclusiveness...

We build a simple model of legal dualism in which a pro-poor legal reform, under certain conditions, causes the conflicting custom to go some way toward producing the change intended by the legislator. It then acts as an 'outside anchor' that exerts a 'magnet effect' on the custom. We illustrate...

The concepts of cultural diversity and cultural identity are at the forefront of the political debate in many western societies. In Europe, the discussion is stimulated by the political pressures associated with immigration flows, which are increasing in many European countries. The imperatives...

We develop a model where, in the first stage, minority individuals have to decide whether or not they want to assimilate to the majority culture while, in the second stage, all individuals (both from the majority and the minority group) embedded in a network have to decide how much effort they...

What determines whether or not multinational firms transplant their mode of organisation to other countries? We embed the theory of knowledge hierarchies in an industry equilibrium model of monopolistic competition to examine how the economic environment may affect the decision of a...

Recent years have witnessed an enormous amount of reorganization of the corporate sector in the US and in Europe. This paper examines the role of market competition for this trend in corporate reorganization. We find that at intermediate levels of competition the CEO of the corporation decides...

Lecture on the first SFB/TR 15 meeting, Gummersbach, July, 18 - 20, 2004: Globalization has been identified by many experts as a new way firms organize their activities and as the emergence of talent as the new stakeholder in the firm. This paper examines the role of trade integration for the...

This paper develops a theory which investigates how firms' choice of corporate organization is affecting firm performance and the nature of competition in international markets. We develop a model in which firms' organisational choices determine heterogeneity across firms in size and...

Corporate organization varies within a country and across countries with country size. The paper starts by establishing some facts about corporate organization based on unique data of 660 Austrian and German corporations. The larger country (Germany) has larger firms with flatter and more...