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Job Independence as an Incentive Device

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  • Mitusch, Kay

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

Suggested Citation

  • Mitusch, Kay, 2000. "Job Independence as an Incentive Device," Economica, London School of Economics and Political Science, vol. 67(266), pages 245-263, May.
  • Handle: RePEc:bla:econom:v:67:y:2000:i:266:p:245-63
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    Cited by:

    1. 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.
    2. 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.
    3. Michael Kuhn, "undated". "Delegating Budgets when Agents Care About Autonomy," Discussion Papers 04/10, Department of Economics, University of York.
    4. 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, July.
    5. 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.

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