Efficiency Wages and X-Inefficiencies
Abstract
Within most organizations, agents may spend time on a variety of tasks--productive and redistributive. In this paper, the author derives an optimal multitask incentive scheme under the assumption that agents have limited liability. The wage level is shown to increase with an agent's discretion and the organization's profits. With multiple agents, it is generally not optimal for the principal to fully eliminate distributional conflict within the organization. The resulting influence costs constitute a measure of X-inefficiency. The analysis illuminates the relationship between competition and influence costs, emphasizing the role of the organization's production technology. Copyright 1997 by The editors of the Scandinavian Journal of Economics.Download Info
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Bibliographic Info
Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.
Volume (Year): 99 (1997)
Issue (Month): 4 (December)
Pages: 581-96
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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442
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Related research
Keywords:Other versions of this item:
- Ellingsen, Tore, 1997. "Efficiency Wages and X-Inefficiencies," Working Paper Series in Economics and Finance 180, Stockholm School of Economics.
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
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Citations
Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.Cited by:
- Matthias Kräkel, 2006.
"On the “Adverse Selection” of Organizations,"
Bonn Econ Discussion Papers
bgse15_2006, University of Bonn, Germany.
- Kräkel, Matthias, 2006. "On the “Adverse Selection” of Organizations," IZA Discussion Papers 2396, Institute for the Study of Labor (IZA).
- Kräkel, Matthias, 2006. "On the "Adverse Selection" of Organizations," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 168, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Konrad, Kai A, 2001.
"Investment in the Absence of Property Rights: The Role of Incumbency Advantages,"
CEPR Discussion Papers
3050, C.E.P.R. Discussion Papers.
- Konrad, Kai A., 2002. "Investment in the absence of property rights; the role of incumbency advantages," European Economic Review, Elsevier, vol. 46(8), pages 1521-1537, September.
- Konrad, Kai A., 2001. "Investment in the absence of property rights: the role of incumbency advantages," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-18, Social Science Research Center Berlin (WZB).
- Kai A. Konrad, 2002. "Investment in the Absence of Property Rights: The Role of Incumbency Advantages," CESifo Working Paper Series 698, CESifo Group Munich.
- Oliver Gürtler, 2010.
"Haggling for Rents, Relational Contracts, and the Theory of the Firm,"
Schmalenbach Business Review (sbr),
LMU Munich School of Management, vol. 62(4), pages 359-377, October.
- Gürtler, Oliver, 2006. "Haggling for Rents, Relational Contracts, and the Theory of the Firm," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 169, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
- Felix Höffler & Sebastian Kranz, 2007. "Legal Unbundling can be a Golden Mean between Vertical Integration and Separation," Bonn Econ Discussion Papers bgse15_2007, University of Bonn, Germany.
- Seabright, Paul, 2000. "Skill versus judgement and the architecture of organisations," European Economic Review, Elsevier, vol. 44(4-6), pages 856-868, May.
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