We investigate the entry of low-cost airlines (LCAs) in the German market. The strong competitive pressure of LCAs forced incumbent air and rail operators to reconsider their pricing strategy. Lufthansa reacted by a drastic cut of all prices for all intra-German origin and destinations (O&Ds)....

This short paper analyses the tension between "widening" and "deepening" of organizations such as the European Union. Members have the same consumption benefit of reform but weak and strong members differ in their cost of exerting reform efforts. As decisions are taken by unanimity, the reform...

We investigate a team setting in which workers have different degrees of commitment to the outcome of their work. We show that if there are complementarities in production and if the team manager has some information about team members, interventions that the manager undertakes in order to...

We study the effect of earnings manipulation on incentives within the corporate hierarchy. When top management manipulates earnings, it must prevent information leakage from corporate insiders to the outside world. If an insider (e.g. a division manager) gains evidence about earnings...

After deregulation in 1980, competitive pressures forced the large U.S. freight railroads to restructure. Much attention has focused on defensive (cost-cutting) restructuring: until 2004 employment was reduced by 60%, and railroads abandoned many of their lines. Less attention has been given to...

We study the effect of earnings manipulation on incentives within the corporate hierarchy. When top management manipulates earnings, it must prevent information leakage from corporate insiders to the outside world. If an insider (e.g. a division manager) gains evidence about earnings...

External shocks may cause a decline in the productivity of fixed capital in certain regions of an economy. Exogenous obstacles to migration make it hard for workers in those regions to reallocate to more prosperous regions. In addition, firms may devise "attachment" strategies to keep workers...

We investigate an economy in which firms have different risks to go bankrupt. We observe two things: first, workers in firms with higher bankruptcy risk (bad firms) always work less than workers in good firms. Second, the CEOs of bad firms may nonetheless receive larger wages. Copyright...