Moral hazard exists in diagnosis-cure' markets because sellers have an incentive to" shade their reports of buyers' condition to increase the short-run demand for the treatments they" supply. The California vehicle emission inspection market offers a rare opportunity to examine" how incentives...

How far do the contractual implications of hold-up-based theories (Klein, Crawford, and Alchian (1978), Williamson (1979, 1985)) extend? I investigate this in the context of trucking. Quasi-rents in trucking are generally smaller than in the contexts studied in the previous empirical literature....

Empirical research on the determinants of firms' boundaries has flourished over the past 25 years. This article discusses the progress that has been made to date, emphasizing the intellectual advances made by researchers in this literature during this period. I stress empirical researchers'...

Hierarchies allow individuals to leverage their knowledge through others' time. This mechanism increases productivity and amplifies the impact of skill heterogeneity on earnings inequality. To quantify this effect, we analyze the earnings and organization of U.S. lawyers and use the equilibrium...

What role do hierarchies play with respect to the organization of production and what determines their structure? We develop an equilibrium model of hierarchical organization, then provide empirical evidence using confidential data on thousands of law offices from the 1992 Census of Services....

What is the role of firms and markets in mediating the division of labor? This paper uses confidential microdata from the Census of Services to examine law firms' boundaries. We find that firms' field scope narrows as market size increases and individuals specialize, indicating that firms'...

A large theoretical literature focuses on the question: What determines firms' boundaries? Recently, Garicano and Santos and Holmstrom and Milgrom have proposed theories in which firms' boundaries reflect the division of labor across individuals. This paper discusses strategies for generating...

This article uses confidential microdata from the Census of Services to examine law firms' field boundaries. We find that the share of lawyers working in field-specialized firms increases as market size increases and lawyers field specialize, indicating that transaction costs among lawyers, and...

Most empirical work in the economics of organization consists of theory-testing exercises, where the theories under examination rely on optimality principles but not equilibrium. This paper discusses recent attempts to bring equilibrium analysis into the economics of organization, highlighting...