When contracting is not possible, a preference for fair exchange can generate efficient exchange, fully exhausting the potential gains from trade — or no exchange at all, leaving all gains from trade unexploited. A profit-maximizing firm offers a wage to a fair-minded worker, who then chooses how much effort to exert. The Rotten Firm theorem says: if the worker cares sufficiently about fairness...

In this paper we combine the efficiency wage and union-firm bargaining approaches to wage determination to produce a unified model that encapsulates both. We find that combining efficiency wages and union-firm bargaining leads to higher wages, confirming an original insight of Summers. We also find that increases in bargaining power and monopoly power on the goods market have a stronger impact ...

We study empirically and analytically growth and fluctuation of firm size distribution. An empirical analysis is carried out on a US data set on firm size, with emphasis on one-time distribution as well as growth-rate probability distribution. Both Pareto’s law and Gibrat’s law are often used to study firm size distribution. Their theoretical relationship is discussed, and it is shown how they ...

In small economies, domestic market size constraints are expected to influence the economic growth process. This paper hypothesises that they will also influence the size and growth of firms in these economies. The paper accomplishes two main objectives. Firstly, it examines the nature of the firm size-firm growth relationship in Jamaica. It tests Gibrat’s Law – that there is no observed relati...

In empirical corporate finance, firm size is commonly used as an important, fundamental firm characteristic. However, no paper comprehensively assesses the sensitivity of empirical results in corporate finance to different measures of firm size. This paper fills this hole by providing empirical evidence for “measurement effect” in “size effect”. In particular, this paper studies the influences ...

this paper is a survey of recent contributions to and developments in the relationship between efficiency and productivity via the production function. the objective is to provide a brief discussion on data and on the methods of measuring efficiency and productivity. first, we introduce the reader to the measurement of partial and total factor productivity in the context of static and firm - sp...