In this paper we use insights from organizational economics and financialregulation to study the optimal architecture of supervision. We suggest that thenew architecture should revolve around the following principles: (i) banking,securities and insurance supervision should be further integrated;...

Large companies are usually organized into business units, yet some activitiesare almost always centralized in a company-wide functional unit. We firstshow that organizations endogenously create an incentive conflict between functionalmanagers (who desire excessive standardization) and...

When should expertise be shared in markets and when in …firms? Knowl-edge exchanges in the market involve less information about the quality ofthe provider's expertise, but facilitate good utilization of experts knowledge.In a …rm, management holds soft information about individuals...

Changes in information and communication technologieshave increased the offshorability of tasks.As routine tasks (Pol Antràs, Luis Garicano and EstebanRossi-Hansberg, 2006) and lower offshoring-costtasks (Gene Grossman and Esteban Rossi-Hansberg,2008) move abroad, production processes become...

We examine how information technology (IT) contributes to organizational change,labor demand, and improved productivity in the public sector using a new paneldata set of police departments covering 1987-2003. While IT adoption is associatedwith increased administrative and organizational...

This paper uses confidential microdata from the Census of Services to examine lawfirms' field boundaries. We find that the share of lawyers working in field-specializedfirms increases as market size increases and lawyers field-specialize, indicating thattransaction costs among lawyers, and not...

This paper examines hierarchies’ role in the organization of human-capital-intensive productionWe develop an equilibrium model of hierarchical organization, then provide empirical evidenceusing confidential data on thousands of law offices from the 1992 Census of Services. We showhow the...

Two recent failures of the United States intelligence system have led to thecreation of high-level investigative commissions. The failure to prevent theterrorist attacks of 9/11 prompted the creation of the 9/11 Commission, andthe mistaken belief that Saddam Hussein had retained weapons of...

Garicano and Rossi-Hansberg (2003) show that knowledge-based hierarchies arecharacterized by positive sorting between workers and managers when knowledgeacquisition takes place before production. We extend the analysis and find thatcomplementarities between manager and worker skill are even...

This paper is concerned with the effect of nonmonetary incentiveson behavior, in particular with the study of social pressure as adeterminant of corruption. We offer empirical evidence that shows howprofessional soccer referees favor home teams in order to satisfy thecrowds in the stadium....