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Job Independence as an Incentive Device

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  • Mitusch, Kay
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    Abstract

    A firm can either subject its workers to strict rules and regulations or grant them independence. If independent, they can make entrenchment-investments which will not only raise their productivity but also make the firm depend on their cooperation. However, in contrast to a standard holdup problem, the firm can afterwards take over control, thus stripping such workers of a part of their bargaining assets. This leads to structural distortions and may aggravate the holdup problem. However, the threat of partial expropriation may also alleviate the holdup problem and even induce over investment. Copyright 2000 by The London School of Economics and Political Science

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    Bibliographic Info

    Article provided by London School of Economics and Political Science in its journal Economica.

    Volume (Year): 67 (2000)
    Issue (Month): 266 (May)
    Pages: 245-63

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    Handle: RePEc:bla:econom:v:67:y:2000:i:266:p:245-63

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    Cited by:
    1. Michael Kuhn, . "Delegating Budgets when Agents Care About Autonomy," Discussion Papers 04/10, Department of Economics, University of York.
    2. Kuhn, Michael & Gundlach, Erich, 2006. "Delegating budgets when agents care about autonomy," Thuenen-Series of Applied Economic Theory 69, University of Rostock, Institute of Economics.
    3. Maija Halonen-Akatwijuka, 2010. "Organizational Design, Technology and the Boundaries of the Firm," Economica, London School of Economics and Political Science, vol. 77(307), pages 544-564, 07.
    4. Kai A. Konrad, 2002. "Investment in the Absence of Property Rights: The Role of Incumbency Advantages," CESifo Working Paper Series 698, CESifo Group Munich.
    5. Mitusch, Kay, 2006. "Non-commitment in performance evaluation and the problem of information distortions," Journal of Economic Behavior & Organization, Elsevier, vol. 60(4), pages 507-525, August.

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