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Contracts, search, and organizational diversity

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  • Ishiguro, Shingo

Abstract

In this paper we develop a search model that allows for Pareto-ranked multiple equilibria and investigate its implications on organizational diversity. The novel feature of the model is that multiple equilibria are obtained by the self-contained feedback mechanism between optimal contracting choices and the reservation value, which is in sharp contrast to existing literature that emphasizes the increasing returns to scale in the matching function. Our results provide some new insights on why there may exist significant differences in the internal organization of firms across countries, and even in the same country and industry.

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Bibliographic Info

Article provided by Elsevier in its journal European Economic Review.

Volume (Year): 54 (2010)
Issue (Month): 5 (July)
Pages: 678-691

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Handle: RePEc:eee:eecrev:v:54:y:2010:i:5:p:678-691

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Web page: http://www.elsevier.com/locate/eer

Related research

Keywords: Delegation Diversity of organization Moral hazard Search;

References

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