Employment Contracts, Finance and the Distribution of Wealth

  • A. F. Newman
Part of the International Economic Association Series book series (IEA)

Abstract

Given technology, preferences and information, which manner of organizing production will survive in a competitive environment? Is hierarchy with monitors and employees a necessary outcome of efficient contracting, or are there conditions under which other organizational forms (such as partnerships) might be viable? In answering these questions, one must take into account the free entry of agents into the different occupations — for example, entrepreneur, manager, employee, partner — that each type of organization entails; the factors which determine occupational choice also affect the competitive selection of organizational form.

Keywords

Europe Income Assure Expense Librium 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. Bernanke, B. and Gertler, M. (1989) ‘Agency Costs, New Worth, and Business Fluctuations’, American Economic Review, vol. 79, no. 1, pp.14–31.Google Scholar
  2. Grossman, S.J. and Hart, O.D. (1986) ‘The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration’, Journal of Political Economy, vol. 94, no. 4, pp.691–719.CrossRefGoogle Scholar
  3. Hart, O.D. and Moore, J. (1990) ‘Property Rights and the Nature of the Firm’, Journal of Political Economy, vol. 98, no. 6, pp.1119–58.CrossRefGoogle Scholar
  4. Kihlstrom, R.E. and Laffont, J.-J. (1979) ‘A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion’, Journal of Political Economy, vol. 87, no. 4, pp.719–48.CrossRefGoogle Scholar
  5. Knight, F. (1929) Risk, Uncertainty and Profit (Boston, Mass.: Houghton Mifflin).Google Scholar
  6. Light, I.H. (1972) Ethnic Enterprise in America: Business and Welfare among Chinese, Japanese and Blacks (Berkeley: University of California Press).Google Scholar
  7. Light, I.H. and Bonacich, E. (1988) Immigrant Entrepreneurs (Berkeley: University of California Press).Google Scholar
  8. Mirrlees, J. (1974) ‘Notes on Welfare Economics, Information, and Uncertainty’, in Balch, M. McFadden, D. and Wu, S.-Y. (eds), Essays on Economic Behaviour under Uncertainty (Amsterdam: North-Holland).Google Scholar
  9. Newman, A.F. (1992) ‘The Capital Market, Inequality and the Employment Relation’, Columbia University (mimeo).Google Scholar
  10. Newman, A.F. (1995) ‘Risk-Bearing and “Knightian” Entrepreneurship’, Columbia University (mimeo).Google Scholar
  11. Roemer, J. (1982) A General Theory of Exploitation and Class (Cambridge, Mass,: Harvard University Press).CrossRefGoogle Scholar
  12. Simon, H. (1951) ‘A Formal Theory of the Employment Relation’, Econometrica, vol. 19, pp.293–305.CrossRefGoogle Scholar
  13. Townsend R.M. (1979) ‘Optimal Contracts and Competitive Markets with Costly State Verification’, Journal of Economic Theory, vol. 21, pp.265–93.CrossRefGoogle Scholar
  14. Williamson, O. (1985) The Economic Institutions of Capitalism (New York: The Free Press).Google Scholar
  15. Aghion, P. and Bolton, P. (1993) ‘A Trickle-Down Theory of Growth and Development with Debt-Overhang’, LSE and Nuffield College, Oxford (mimeo).Google Scholar
  16. Banerjee, A. and Newman, A. (1993) ‘Occupational Choice and the Process of Development’ Journal of Political Economy vol. 101. pp.274–99.CrossRefGoogle Scholar
  17. Guesnerie, R. (1975) ‘Pareto-Optimality in Non-Convex Economies’, Econometrica vol. 43, pp.1–30.CrossRefGoogle Scholar
  18. Legros, P. and Newman, A. (1994) ‘Wealth Effects, Distribution, and the Theory of Organization’ Cornell and Columbia (mimeo).Google Scholar
  19. Piketty, T. (1992) ‘Imperfect Capital Markets and Persistence of Initial Wealth Inequalities’, working paper LSE/STICERD no. TE/92/255.Google Scholar

Copyright information

© International Economic Association 1997

Authors and Affiliations

  • A. F. Newman
    • 1
  1. 1.Columbia UniversityNew YorkUSA

Personalised recommendations