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Research Details
Productivity and Credibility in Industry Equilibrium, RAND Journal of Economics
Abstract
I analyze a model of production in a competitive environment with heterogeneous firms. Efficient production requires individuals within the organization to take non-contractible actions for which rewards must be informally promised rather than contractually assured. The credibility of such promises emerges from a firm's future competitive rents. Equilibrium competitive rents are inefficient concentrated at the top. I explore several policy and empirical implications of this result.
Type
Article
Author(s)
Date Published
2019
Citations
Powell, Michael. 2019. Productivity and Credibility in Industry Equilibrium. RAND Journal of Economics. 50(1): 121-146.
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