Organizational Design and Technology Choice under Intrafirm Bargaining: Comment

The authors consider a wide number of applications of an intrafirm bargaining game within organizations where employees and the firm engage in wage negotiations. Under their presumption that contracts cannot bind employees to the organization, the resulting stable wage and profit profiles give rise to an objective function for the firm that places weight on inframarginal profits in an economically significant manner. The authors in turn employ this methodology to explore applications of organizational design, hiring and capital decisions, training and cross-training, the importance of labor and asset specificity, managerial hierarchies, preferences for unionization, responses to competition, and internal capital budgeting. Copyright 1996 by American Economic Association.

[1]  O. Hart,et al.  Incomplete Contracts and Renegotiation , 1988 .

[2]  B. Klein,et al.  Vertical Integration, Appropriable Rents, and the Competitive Contracting Process , 1978, The Journal of Law and Economics.

[3]  L. Shapley,et al.  Values of Non-Atomic Games , 1974 .

[4]  Klaus M. Schmidt,et al.  Option Contracts and Renegotiation - A Solution to the Hold-Up Problem , 1995 .

[5]  Joan V. Robinson,et al.  The Nature of the Firm , 2004 .

[6]  Martin L. Weitzman,et al.  Some Macroeconomic Implications of Alternative Compensation Systems , 1983 .

[7]  Louis Kaplow,et al.  Economic Analysis of Law , 2004 .

[8]  Paul R. Milgrom,et al.  Monotone Comparative Statics , 1994 .

[9]  J. Stiglitz,et al.  Discouraging Rivals: Managerial Rent-Seeking and Economic Inefficiencies , 1992 .

[10]  Harl E. Ryder,et al.  Markets and democracy: participation, accountability and efficiency: Wage bargaining and the choice of production technique in capitalist firms , 1993 .

[11]  Lars Stole,et al.  Intrafirm Bargaining Under Nonbinding Contracts , 1996 .

[12]  S. Reichelstein,et al.  Holdups, Standard Breach Remedies, and Optimal Investment , 1995 .

[13]  J. Gans,et al.  Involuntary Unemployment and Intrafirm Bargaining with Replacement Workers , 2000 .

[14]  Lars Stole,et al.  Intra-firm Bargaining under Non-binding Contracts , 1996 .

[15]  Sanford J. Grossman,et al.  The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration , 1986 .

[16]  O. Hart,et al.  Property Rights and the Nature of the Firm , 1988, Journal of Political Economy.

[17]  P. Cahuc,et al.  A Theory of Wages and Labor Demand with Intra-Firm Bargaining and Matching Frictions , 2004 .

[18]  Markets and Democracy: Participation, Accountability and Efficiency , 1994 .

[19]  C. Shapiro,et al.  Equilibrium Unemployment as a Worker Discipline Device , 1984 .

[20]  W. Rogerson.  Contractual Solutions to the Hold-Up Problem , 1992 .

[21]  Asher Wolinsky,et al.  Worker Substitutability and Patterns of Unionisation , 1988 .

[22]  O. Williamson,et al.  Markets and Hierarchies: Analysis and Antitrust Implications. , 1977 .

[23]  Tai-Yeong Chung,et al.  Incomplete Contracts, Specific Investments, and Risk Sharing , 1991 .

[24]  Carliss Y. Baldwin,et al.  Productivity and Labor Unions: An Application of the Theory of Self-Enforcing Contracts , 1983 .

[25]  J. Stein,et al.  Employee opportunism and redundancy in firms , 1988 .

[26]  Paul Milgrom,et al.  Bargaining and Influence Costs and the Organization of Economic Activity , 1987 .

[27]  A. Shleifer,et al.  Management Entrenchment the Case of Manager-specific Investments* , 2001 .

[28]  Ricardo J. Caballero,et al.  The Macroeconomics of Specificity , 1996, Journal of Political Economy.

[29]  A. Shaked,et al.  Involuntary Unemployment as a Perfect Equilibrium in a Bargaining Model (Now published in Econometrica, vol.52, (1984), pp.1351-1364.) , 1984 .

[30]  E. Lazear,et al.  Raids and Offermatching , 1984 .

[31]  James M. Malcomson,et al.  Contracts, hold-up and labor markets , 1997 .

[32]  M. C. Jensen,et al.  THEORY OF THE FIRM: MANAGERIAL BEHAVIOR, AGENCY COSTS AND OWNERSHIP STRUCTURE , 1976 .

[33]  James L. Medoff,et al.  What Do Unions Do , 1986 .

[34]  Philippe Aghion,et al.  RENEGOTIATION DESIGN WITH UNVERIFIABLE INFORMATION , 1994 .

[35]  P. Grout,et al.  Investment and Wages in the Absence of Binding Contracts: A Nash Bargining Approach , 1984 .

[36]  James M. Malcomson,et al.  Investments, Holdup, and the Form of Market Contracts. , 1993 .

[37]  P. Bolton,et al.  Optimal debt structure with multiple creditors , 1993 .

[38]  A. Wolinsky.  A Theory of the Firm with Non-Binding Employment Contracts , 2000 .