According to prevailing theory, firms diversify in response to excess capacity of factors that are subject to market failure. By probing into the heterogeneity of these factors, we develop the corollary that firms that elect to diversify most widely should expect the lowest average rents. An...

We use a data set describing ownership of productive assets in the carpentry trade to evaluate several factors influencing the allocation of asset ownership between an employer and his employees. The findings suggest that the allocation involves a tradeoff between two incentive effects...

Gaining market share can be a means of obtaining profits. While one cannot develop precise prescriptions for gaining market share in complex and dynamic environments, a stylized model can provide a reference point for evaluating what to do in more complex situations.

A mechanism with low direct cost of use may be preferred to alternatives implementing more efficient allocations. We show this experimentally by giving pairs of subjects the option to agree on a single average price for a sequence of trades--in effect pooling several small bargains into a larger...