This paper examines how the optimal Pigouvian tax should be adjusted to reflect administrative costs. Several cases are examined, depending on whether the administrative costs are fixed per firm taxed or are a function of the amount of tax collected, and on whether such costs are borne by the government or by the taxed firm. In some cases the presence of administrative costs leads to an optimal...

A large body of empirical work documents that prices of traded goods change by a smaller proportion than real exchange rates between the trading countries (incomplete pass-through). I present a Ricardian model of trade and international price-setting with heterogeneous firms, Bertrand competition and incomplete information. The model implies that: 1) firm-level passthrough is incomplete and a U...

I develop a matching model with heterogeneous workers, firms, and worker-firm matches, and apply it to longitudinal linked data on employers and employees. Workers vary in their marginal product when employed. Firms vary in their marginal product and cost of maintaining a vacancy. The marginal product of a worker-firm match also depends on a match-specific interaction between worker and firm th...

We estimate a standard human capital earnings model, augmented to allow for different firmspecific wage premia. The earnings of an individual depend on her human capital bundle and the earnings mark-up of the firm she is currently working for. We use linked employer-employee data from Norway which allows us to directly estimate the skill premium as a function of firm specific variables such as ...

ing from money, meaning everything is denominated in units of goods, e.g. fruit). Total cost is the wage bill plus the capital bill. Let wt be the real wage rate – it is the number of goods the firm must pay each unit of labor. Let Rt be the real “rental rate” – it is the number of goods the firm must give up to lease a unit of capital. The firm is a price-taker, so it takes these as given. Pro...

Drug development performance is examined using data on clinical research projects of 10 pharmaceutical companies. In contrast to previous work on the discovery phase of pharmaceutical R&D we find a strong correlation between the diversity of firms' development efforts and the success probability of individual projects, but no effect of scale per se. Large firms' superior performance in drug dev...

This paper examines emerging industries that exhibit positive network effects. We put forward a dynamic model in which two technologies compete to be the standard. The model provides a quantitative method for the valuation of firms. We use the model to examine the relationship between network effects, consumer heterogeneity, and prices. We show that the firm value depends strongly on the partic...

The question of whether or not HRM matters is one that has occupied much of HR academics’ thinking over the last decade. Although hard data on the relationship between HRM and (firm) performance is now available, our understanding of the link to performance (often known as the ‘black box’ problem) has been and remains a mystery. The purpose of this paper is to correct this gap. Taking a human n...

We investigate the problem of optimal bidding for a firm that in each period procures items to meet a random demand by participating in a finite sequence of auctions. We develop a new model for a firm where its item valuation derives from the sale of the acquired items via their demand distribution, sale price, acquisition cost, salvage value and lost sales. We establish monotonicity properties...