The paper seeks to integrate the theoretical developments in the field of imperfect competition and monopoly, and operation of the firm in such conditions, with the theories of income distribution, particularly among the macroeconomic aggregates of capital and labor. And formulating a working...

The effects of capital destruction are endogenized in a neoclassical growth model where the economy can optimally allocate part of its labor force to defend capital from being destroyed. The purpose is to explain the optimal allocation of the labor force between productive and deterrence...

Property rights protection has been found to promote economic growth at the macro level, and affect the incentive for investment at the micro level. What is not clear is whether and how property rights protection affects a firm's allocation of investment across industries for a given size of...

This paper studies alternative contract damage measures in the presence of specific investments that generate a direct benefit to the investor's trading partner (referred to as "cooperative investments"). We find that, both with and without the possibility of ex post renegotiation, (i) the...

In an environment in which both buyers and sellers can undertake match specific investments, the presence of market competition for matches may solve hold-up and coordination problems generated by the absence of complete contingent contracts. In particular, this paper shows that when matching is...

This paper studies a two stage incomplete contract between a buyer and a seller, with specific investments and endogenous outside options. Given that a party's outside option identifies counterpart's competitors, with such endogenous outside options, some of the main conclusions of the standard...

A simple model incorporating rent-seeking into the standard neoclassical model of capital accumulation is presented. It embodies the idea that the performance of an economy depends on the efficiency of its institutions. It is shown that welfare is positively affected by the institutional...

Which is the tighter constraint on private sector investment: weak property rights or limited access to external finance? From a survey of new firms in post-communist countries, we find that weak property rights discourage firms from reinvesting their profits, even when bank loans are available....