Personnel economics has put forward conflicting arguments concerning the impact of increased wage dispersion within a firm on the productivity of its workers. Besides giving more incentives, bigger wage differentials might also give rise to less cooperation and more politicking amongst workers resulting in worse outcomes. We try to shed light on these issues using panel data for Austrian firms....

Tosi and Gomez-Mejia, (1989) suggest that the challenge of corporate governance is to set up supervisory and incentive alignment mechanisms that alter the risk and effort orientation of agents to align them with the interests of principals. Therefore, the objective of this study is to determine the efficiency of monitoring and incentive contracts given certain characteristics of the firm. That ...

This paper clarifies how uncertainty affects irreversible investment in a competitive market equilibrium. With free entry, irreversibility affects the distribution of future prices, and thereby creates an opportunity cost of investing now rather than waiting. As with an imperfectly competitive firm, uncertainty can also increase the value of a marginal unit of capital. I show that with an infin...

Our model comprises a firm, which sets a default contribution rate for the company savings plan, and the workers who choose their behavior in response. Consider a group of workers with quasi-hyperbolic preferences, so that they have discount function 1, βδ, βδ, ... where 0 < β ≤ 1. For simplicity, we assume that δ = 1, eliminating long run discounting. We also assume that each worker has an exo...

This study measures the impact of investment climate factors on the total factor productivity (TFP) of agricultural manufacturing firms in Hanoi, Vietnam. Endogeneity of the production function and of the investment climate variables is addressed by using econometric models, based on individual firm information, and by aggregating investment climate factors by various business lines. Specifical...

This paper investigates the profitability and locational effects of mergers when firms play a Cournot game and compete in spatially differentiated markets. A two-firm merger is generally profitable in these types of markets because the merged partners can coordinate their location decisions. The merged firm locates its plants outside the market quartiles with distance from the market center bei...

The last decades have seen a growing interest in the theory of the firm by economic theory. Different theoretical strands have been developed, each trying to go further than the standard micro model of the firm as a capital-labour function. The original question of what is the firm can be traced back to the classic work of Coase (1937) still, his questions were only again effectively grasped in...

ore than one commentator has observed that a distinct theory of the firm is conspicuously missing from the main body of Austrian economics (e.g., Langlois 1991, p. 2; Minkler 1991, p. 8). As two Austrian economists observed some years ago: "there is no subjectivist or Austrian theory of the firm" (O'Driscoll and Rizzo 1985, p. 123). That is still the situation. With the term "theory of the firm...