In this paper we want to analyze the internal divisional structure within an organi-zation in the framework of incomplete contract theory. We use the framework of Aghionand Tirole (1997) and define the managerial control structure as "sequence of search".A key feature of this paper which...

Shirking opportunity has always been present in an incomplete economic exchange in a labor-employer relation. Due to unverifiability of a contract, economic agents resort to reciprocal norm to enhance the co-operation and efficiency of the relation. This paper uses some data from Kean Siang et...

I explore the effects and optimum features of the borrowing structure in an incomplete contracting framework with a verification opportunity. In this framework, liquidation and verification, both of which are inefficient and consequently the objectives of renegotiation, are devices to implement...

This paper examines what drives author ordering in scientific research. We first discussa theoretical framework for the choice between alphabetical ordering and relative-contribution-based ordering and develop hypotheses, focusing on the nature of research, in particular, the importance of...

Why do many of the world's most productive firms prefer global outsourcing to FDI? To address this issue, this paper introduces an intermediate-good producer to Antràs and Helpman's (2004) North–South model, where the Northern firms can employ the producer via an outsourcing contract and have...

We study the variation in ownership shares across affiliates of the same multinational firm. Using the micro-level data on foreign affiliates of South Korean multinationals, we construct a proxy for the headquarter intangible asset using transferred Korean workers from the parent to the...

There are two remedies to the breach of a contract: the damages rule, that is prevailing in the Common Law system, and the specific performance rule, that is dominant in the Civil Law system. Economic justifications have often been given for the first rule, but the second. Using the incomplete...

We develop a model of strategic contractual incompleteness that identifies conditions under which principals might omit even costlessly verifiable terms. We then use experiments to test comparative statics predictions of the model. While it is well known that verifiability imperfections can...