We model a firm in an institutional market setting, consisting of a production technology and its governance. The governance consists of a hierarchical firm structure, a cost efficiency parameter,and an internal pay system. The depth of the firm is determined by profit maximization under the...

In this paper the economies of scale arising from the acquisition of costly information and their implications for the existence of a competitive equilibrium are investigated. As is known, the existence of economies in the scale of production undermines the possibility of a competitive...