Incentives, Contracts, and Markets: A General Equilibrium Theory of Firms
AbstractThis paper takes steps toward integrating firm theory in the spirit of Alchian and Demsetz (1972) and Grossman and Hart (1986), contract theory in the spirit of Holmstrom (1979), and general equilibrium theory in the spirit of Arrow and Debreu (1954) and McKenzie (1959). In the model presented here, the set of firms that form and the contractual arrangements that appear, the assignments of agents to firms, the prices faced by firms for inputs and outputs, and the incentives to agents are all determined endogenously at equilibrium. Agents choose consumption-but they also choose which firms to join, which roles to occupy in those firms, and which actions to take in those roles. Agents interact anonymously with the (large) market, but strategically within the (small) firms they join. The model accommodates moral hazard, adverse selection, signaling, and insurance. Equilibria may be Pareto ranked. Copyright The Econometric Society 2007.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Econometric Society in its journal Econometrica.
Volume (Year): 75 (2007)
Issue (Month): 5 (09)
Other versions of this item:
- William R. Zame, 2005. "Incentives, Contracts And Markets: A General Equilibrium Theory Of Firms," UCLA Economics Working Papers 843, UCLA Department of Economics.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Hideo Konishi, 2011. "Entrepreneurial Land Developers: Joint Production, Local Externalities, and Mixed Housing," Boston College Working Papers in Economics 777, Boston College Department of Economics, revised 06 Apr 2013.
- Michael Magill & Martine Quinzii, 2009.
"The probability approach to general equilibrium with production,"
Springer, vol. 39(1), pages 1-41, April.
- Martine Quinzii & Michael Magill, 2007. "The Probability Approach To General Equilibrium With Production," Working Papers 83, University of California, Davis, Department of Economics.
- Guido Ruta & Piero Gottardi, 2009.
"Equilibrium corporate finance,"
2009 Meeting Papers
149, Society for Economic Dynamics.
- Konishi, Hideo, 2013. "Entrepreneurial land developers: Joint production, local externalities, and mixed housing developments," Journal of Urban Economics, Elsevier, vol. 75(C), pages 68-79.
- Joon Song, 2007.
"Futures Market: Contractual Arrangement to Restrain Moral Hazard in Teams,"
Economics Discussion Papers
633, University of Essex, Department of Economics.
- Joon Song, 2012. "Futures market: contractual arrangement to restrain moral hazard in teams," Economic Theory, Springer, vol. 51(1), pages 163-189, September.
- Guido Maretto, 2011. "Contracts and Market: Risk Sharing with Hidden Types," Working Papers ECARES ECARES 2011-005, ULB -- Universite Libre de Bruxelles.
- ap Gwilym, Rhys & Ebrahim, M. Shahid, 2013. "Can position limits restrain ‘rogue’ trading?," Journal of Banking & Finance, Elsevier, vol. 37(3), pages 824-836.
- Murizah Osman Salleh & Aziz Jaafar & M. Shahid Ebrahim, 2011. "The Inhibition of Usury (Riba An-Nasi'ah) and the Economic Underdevelopment of the Muslim World," Working Papers 11002, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
- Hideo Konishi, 2009.
"Efficient Mixed Clubs: Nonlinear-Pricing Equilibria with Entrepreneurial Managers,"
Boston College Working Papers in Economics
710, Boston College Department of Economics, revised 08 Sep 2009.
- Hideo Konishi, 2010. "Efficient Mixed Clubs: Nonlinear-Pricing Equilibria With Entrepreneurial Managers," The Japanese Economic Review, Japanese Economic Association, vol. 61(1), pages 35-63.
- Christian Roessler & Philipp Koellinger, 2009. "Firm Formation with Complementarities: The Role of the Entrepreneur," Tinbergen Institute Discussion Papers 09-003/3, Tinbergen Institute, revised 26 Jul 2011.
- Roessler, Christian & Koellinger, Philipp, 2012. "Entrepreneurship and organization design," European Economic Review, Elsevier, vol. 56(4), pages 888-902.
- Hans Gersbach & Hans Haller & Hideo Konishi, 2013.
"Household Formation and Markets,"
CESifo Working Paper Series
4414, CESifo Group Munich.
- Hans Gersbach & Hans Haller & Hideo Konishi, 2013. "Household Formation and Markets," Boston College Working Papers in Economics 821, Boston College Department of Economics.
- Hans Haller & Hans Gersbach & Hideo Konishi, 2013. "Household Formation and Markets," Working Papers e07-36, Virginia Polytechnic Institute and State University, Department of Economics.
- Luque, Jaime, 2013. "Heterogeneous Tiebout communities with private production and anonymous crowding," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 117-123.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.