This paper argues that the internal organization of the firm and the growth process interact strongly to determine simultaneously the power of incentives within the firm and the growth rate of the economy. We show how agents within the firm can invest either by using their own human capital or...

Derivative securities may incite traders to manipulate the price of the underlying assets. We analyze this issue at the exercise date of an European option on a stock, when the stock price determines the option payoff. Traders submit their demand for the stock to an auctioneer who selects a...