are the self employed really jacks of all trades testing the assumptions and implications of lazear s theory of entrepreneurship with german data using a large representative german data set and various concepts of self employment this paper tests the jack of all trades view of entrepreneurship by lazear am econ rev 94 2 208 211 2004 consistent with its theoretical assumptions we find that self employed individuals perform more tasks and that their work requires more skills than that of paid employees in contrast to lazear s assumptions however self employed individuals do not just need more basic but also more expert skills than employees our results also provide rather limited support for the idea that human capital investment patterns differ between those who become self employed and those ending up in paid employment

power competition and the free trader vulgaris competition is taken for granted by neoclassical economics its cause is human nature and its functioning is the result of spontaneous interactions as such it is contrasted with power which is an unnatural restriction on human liberty by contrast marx discusses competition as a coercive mechanism historically competition develops with the development of market relations and what today appears as human nature is part of this process thus it is within competition and not outside of it that marx explains the coercive nature of capitalism his critique shows that competition and power appear to be antithetical because market relations are based on individual freedom however class relations are another essential aspect of capitalism by neglecting these relations neoclassical economists including those of a radical inspiration implicitly espouse the ruling class s viewpoint which they simply translate into rigorous mathematical terms in this sense they are the modern expression of what marx called the vulgar political economy

real time decentralized information processing as a model of organizations with boundedly rational agents this paper studies the properties of real time decentralized information processing as a model of human information processing in organizations real time decentralized processingwhich models the computation of decision rules in a temporal decision problem by members of an organization captures both the cost of computation in terms of the members time and the constraints imposed by computational delay on the use of recent information unlike a batch processing model it has no single measure of delay because decisions are computed from data of heterogeneous lags furthermore decentralization does not unambiguously reduce delay because processing a message precludes processing current data 1 real time decentralized information processing

trade competition and domestic pollution a panel study 1980 2003 this research note examines whether trade competition abets regula tory races in the environmental area to analyze trade competition we develop a new measure structural equivalence which assesses competitive threats that a country faces from other countries whose firms export the same products to the same destination countries employing this new measure we analyze air pollution intensity sulfur diox ide or so2 and water pollution intensity biochemical oxygen demand or bod for a panel of 140 countries for the time period 1980 2003 we find that trade competi tion is a significant predictor of water pollution intensity among structurally equiva lent countries we then test separately whether trade competition abets upward and downward regulatory races we find that in the case of water pollution countries respond symmetrically to downward and upward races that is they follow their struc turally equivalent competitor countries both when they ratchet down their regula tions and when they ratchet up regulations in the case of air pollution however countries are responsive to downward policy changes only in competitor countries

coding error or statistical embellishment the political economy of reporting climate aid to benefit from a wide spread public support for climate policy aid agencies strive to show the climate relevance of their development activities using project level aid data and country level political data for 21 dac donors from 1995 to 2007 we test whether this may lead to politically motivated misreporting through keyword search in individual project descriptions and complementary hand coding we assess all aid activities for their actual climate change related content and thereby construct our most relevant control variables econometric results reveal that indeed project coding is influenced systematically by the donor governments ideological orientation as well as by national voters environmental preferences

the decentralization of information processing in the presence of interactions we propose a model of organizational decision making in which information processing is decentralized our model incorporates two features of many actual organizations aggregation entails a loss of useful information and the decision problems of different agents interact we assume that an organization forms a portfolio of risky assets following a hierarchical procedure agents decision rules and the organization s hierarchical structure are derived endogenously typically in the optimal hierarchical structure all agents have one subordinate and returns to ability are at least as high at the bottom as at the top however these results can be reversed in the presence of returns to specialization

national institutions and global public goods are democracies more cooperative in climate change policy this article examines whether democracies contribute more to the pro vision of global public goods it thus contributes to the debate on the effects of domes tic institutions on international cooperation the focus is on human induced climate change in stern s words the biggest market failure the world has ever seen 1 using new data on climate change cooperation we study a cross section of 185 countries in 1990 2004 the results show that the effect of democracy on levels of political com mitment to climate change mitigation policy output is positive in contrast the effect on policy outcomes measured in terms of emission levels and trends is ambiguous these results demonstrate that up until now the democracy effect has not been able to override countervailing forces that emanate from the free rider problem discounting of future benefits of climate change mitigation and other factors that cut against efforts to reduce emissions even though democracies have had a slow start in moving from political and legal commitments policy output to emission reductions policy out comes particularly in the transportation sector we observe some encouraging signs the main implication of our findings for research on international politics is that greater efforts should be made to study policy output and outcome side by side this will help in identifying whether more democratic countries experience larger words deeds gaps also in other policy areas and whether there are systematic differences of this kind between domestic and international commitments and across different policy areas

does trade liberalization lead to environmental burden shifting in the global economy abstract does trade liberalization lead to the outsourcing of pollution from industrialized countries to developing countries according to the pollution haven hypothesis international trade is a key channel through which richer countries can geographically dissociate consumption from production of goods we examine whether and how trade liberalization via preferential trade agreements ptas facilitates the shifting of consumption based environmental burdens from developed countries via imports to poorer countries via exports based on panel data analysis of 183 countries from 1987 to 2013 we find partial evidence for trade induced environmental burden shifting while we observe an increase in footprint exports from low income countries when these countries liberalize trade this is not matched by an increase in footprint imports of high income countries our results also show that environmental clauses in ptas and participation in international environmental agreements do not influence the relationship between trade liberalization and ecological footprint movements however domestic institutions have a significant effect on the trade induced distribution of environmental burdens these findings suggest that ptas as a policy tool for trade liberalization are per se unlikely to induce exploitation of low income countries natural capital by wealthier nations however they suggest that political incentives inherent to democratic institutions encourage environmental burden shifting

the voluntary provision of a pure public good the case of reduced cfc emissions and the montreal protocol abstract this paper applies the theory of the voluntary provision of a pure public good to the behavior of nations to curb chlorofluorocarbon cfc emissions during the late 1980s by devising an empirical test we determine that these cutbacks in emissions are consistent with nash behavior when taste parameters are controlled the relationship between emission cutbacks and national income is nearly linear as implied by the theory if the sample is purged of potential outliers then the linear relationship results a significant taste parameter is the extent of political and civil freedoms while a marginally significant parameter is geophysical position in terms of latitude

on the design of hierarchies coordination versus specialization we consider an economy that has to decide how assets are to be used agents have ideas but these ideas conflict we suppose that decision making authority is determined by hierarchy each asset ha

the architecture of economic systems hierarchies and polyarchies the authors present new ways of looking at economic organizations andsystems individuals judgments entail errors they sometimes reject good projects and accept bad projects the architecture of an economicsystem specifying how the decision making units are organized togetherwithin a system who gathers what information and who communicates what with whom affects its performance both because it influences thenature of errors that individuals make within the system and becauseit has a critical effect on the aggregation of individuals errors theperformance of two polar architectures decentralized polyarchical versus centralized hierarchical decision making authorities are analyzed and compared copyright 1986 by american economic association

the firm as a dedicated hierarchy a theory of the origins and growth of firms in the formative stages of their businesses entrepreneurs have to provide incentives for employees to protect rather than steal the source of organizational rents we study how the entrepreneur s response to this problem determines the organization s internal structure growth and its eventual size large steep hierarchies will predominate in physical capital intensive industries and will have seniority based promotion policies by contrast e at hierarchies will prevail in human capital intensive industries and will have up or out promotion systems furthermore e at hierarchies will have more distinctive technologies or cultures than steep hierarchies the model points to some essential differences between organized hierarchies and markets at the root of most enterprises generating economic surplus is an entrepreneur with a unique critical resource such as an idea good customer relationships a new tool or superior management technique a fundamental problem of entrepreneurship is how to enlist the cooperation of the many agents necessary for production without ceding to them too much of the surplus generated by the enterprise the risk of being expropriated however is always inherent in production in particular the entrepreneur has to give her employees whom we call managers close proximity or access to the critical resource for them to learn to produce effectively for example a manager has to understand the idea be in contact with the key customers and suppliers or even learn the entrepreneur s unique managerial techniques in order to work effectively but access also gives the manager the opportunity to expropriate this critical resource and compete against the entrepreneur managers may steal the idea walk away with clients or mimic the entrepreneur s management style and start up a rival concern the greater the access a manager has the more he can appropriate and the more effectively he can compete this paper explores the role of organizational design in

decentralization duplication and delay we argue that although decentralization has advantages in finding low cost solutions these advantages are accompanied by coordination problems which lead to delay or duplication of effort or both consequently decentralization is desirable when there is little urgency or a great deal of private information but it is strictly undesirable in urgent problems when private information is less important we also examine the effect of large numbers and find that coordination problems disappear in the limit if distributions are common knowledge

does product market competition lead firms to decentralize there is a widespread sense that over the last two decades firms have been decentralizing decisions to employees further down the managerial hierarchy economists have developed a range of theories to account for delegation but there is less empirical evidence especially across countries this has limited the ability to understand the phenomenon of decentralization to address the empirical lacuna we have developed a research program to measure the internal organization of firms including their decentralization decisions across a large range of industries and countries in this paper we investigate whether greater product market competition increases decentralization for example tougher competition may make local manager s information more valuable as delays to decisions become more costly since globalization and liberalization have increased the competitiveness of product markets one explanation for the trend towards decentralization could be increased competition of course there are a range of other factors that may also be at play including human capital information and communication technology culture and industrial composition to tackle these issues we collected detailed information on the internal organization of firms across nations the few datasets that exist are either from a single industry or at best across many firms in a single country we analyze data on almost 4 000 firms across twelve countries in europe north america and asia we find that competition does indeed seem to foster greater decentralization

an inquiry into the rapid growth of the garment industry in bangladesh abstractthe export oriented garment industry in bangladesh has grown rapidly for the last 3 decades and now ranks among the largest garment exporters in the world while its early success is attributed to the initial technology transfer from south korea such a one time infusion of knowledge alone is insufficient to explain the sustained growth for 3 decades this article uses primary data collected from knitwear manufacturers and garment traders to explore the process of the continuous learning of advanced skills and know how it finds among other things that the high profitability of garment manufacturing due to the initial infusion of specific human capital attracted a number of highly educated entrepreneurs to the industry that the division of labor between manufacturers and traders has facilitated the expansion of the industry and that enterprise growth has lasted long because of the continuous learning from abroad by the highly educated entrepreneurs

technology strategy governance structure and interdivisional coordination abstract this paper studies how various organizational forms compare in their capacities to solve coordination problems created by technological interdependence between firms divisions i contrast the organizational mechanisms used by two firms ibm and general motors to address these problems while it is widely recognized that centralization distorts incentives facing division managers this paper highlights its benefits when there are large potential gains from agreement on technological standards the examples show how a centralized governance structure supported by lower powered incentives facilitates interdivisional coordination this suggests a refinement of the theory of organizational form based on how firms resolve the tensions between strategic planning and the measurement of organizational units performances

political institutions and pollution control this paper models the selection of environmental policies under authoritarian and democratic regimes and tests the hypothesis that political institutions systematically affect the enactment of environmental regulations the results support the contention that political institutional arrangements rather than resource endowments largely determine policies concerning environmental regulation copyright 1992 by mit press

on partial contracting this paper investigates contracting situations where giving away some control rights enhances both the donor s and the receiver s incentives to cooperate in the future we define a partial contracting framework with nonverifiable actions for which either control is contractible contractible control actions or the right to transfer control ex post to another party is contractible transferable control actions under incomplete information when control over particular actions is transferable but not contractible it can be optimal to give one party the right to transfer control over a particular action to the other party in order for that party to build a reputation regarding her willingness to cooperate in the future c 2002 elsevier science b v all rights reserved

uncertainty task environment and organization design an empirical investigation the paper addresses two broad research questions 1 how do internal uncertainty associated with the task environment and external uncertainty arising from market volatility impact organization design 2 what are the relationships among various elements of organization design delegation of decision making incentives monitoring and internal labor market practices promotion training employment security we expand on prendergast 2002a who challenged the conventional view of a tradeoff between risk and incentives and build a single unified framework for answering our two research questions using a uniquely rich dataset that contains detailed information about the task environment of core employees and organization design at the individual group and firms levels in 530 minnesota firms in the mid 1990s we first find support for prendergast s key argument that internal uncertainty over which employees have control affects directly the allocation of decision making and only indirectly incentives via allocation of decision making this confirms similar findings by foss and laursen 2005 devaro and kurtulus 2010 and shi 2011 we also find that internal uncertainty has much impact on organization design through the choice of delegation of decision making at the employee level less so at the group level and very little at the firm level whereas external market uncertainty has little effect on organization design especially at the individual and group level decision making monitoring various internal labor market practices and incentives are strongly related to each other through substitution and complementarity

rational inattention and organizational focus this paper studies optimal communication flows in organizations a production process can be coordinated ex ante by letting agents stick to a prespecified plan of action alternatively agents may adapt to task specific shocks in which case tasks must be coordinated ex post using communication when attention is scarce an optimal organization coordinates only a few tasks ex post those tasks are higher performing more adaptive to the environment and influential hence scarce attention requires setting priorities not just local optimization our results provide microfoundations for a central idea in the management literature that firms should focus on a limited set of core competencies

when does coordination require centralization this paper compares centralized and decentralized coordination when manag ers are privately informed and communicate strategically we consider a multi divisional organization in which decisions must be adapted to local conditions but also coordinated with each other information about local conditions is dispersed and held by self interested division managers who communicate via cheap talk the only available formal mechanism is the allocation of decision rights we show that a higher need for coordination improves horizontal com

strategic shirking a theoretical analysis of multitasking and specialization we provide a new theory to explain why firms multitask workers instead of specializing them workers overperform in tasks they like and underperform in tasks they dislike to favorably influence future job assignments anticipating this firms may find it optimal to commit to future multitasking to induce workers to appropriately allocate effort early in the employment relationship we show that when the product market is volatile so that future product prices are uncertain the firm s ability to credibly commit to a multitasking strategy diminishes this generates a negative relationship between multitasking and product market volatility consistent with recent empirical evidence

hierarchies and the survival of prisoners of war during world war ii using a comprehensive database of american prisoners of war during world war ii we find that survival from captivity generally declines as the hierarchy of a prisoner s group becomes steeper or more closely matches the military s established hierarchy there is no evidence that survival is enhanced by being held in more hierarchical groups one interpretation of these findings that is consistent with survivors accounts is that the military s hierarchy was too inflexible to adapt from the battlefield to captivity and this inflexibility impeded trading among the prisoners this paper was accepted by brad barber finance

is democracy good for the poor many scholars claim that democracy improves the welfare of the poor this article uses data on infant and child mortality to challenge this claim cross national studies tend to exclude from their samples nondemocratic states that have performed well this leads to the mistaken inference that nondemocracies have worse records than democracies once these and other flaws are corrected democracy has little or no effect on infant and child mortality rates democracies spend more money on education and health than nondemocracies but these benefits seem to accrue to middle and upper income groups

valuing forest ecosystem services what we know and what we don t abstract ecosystem services valuation has achieved considerable prominence in research and policy circles in recent years this paper reviews the studies that have tried to estimate the value of forest ecosystem services broadly this study addresses the following questions 1 what insights do these studies provide on the value of forest ecosystems 2 what lessons do they offer from an economic and policy perspective 3 what are the shortcomings of the existing studies and what are the challenges and issues for future research evidence from a cross section of forest sites countries and regions suggests that not only the total valuation of ecosystem services varies widely across studies but also the valuation of individual services this variation suggests that policies to conserve ecosystems and their services should emphasise local contexts and values this paper concludes by discussing the shortcomings of existing studies and suggests that among other things future research should focus on the neglected ecosystem services disservices assess the role of dynamic factors and environmental catastrophes on the provision of ecosystem services and assess the benefits of keeping forests intact versus converting them to alternative uses

the firm as a communication network this paper analyzes how organizations can minimize costs of processing and communicating information communication is costly because it takes time for an agent to absorb new information sent by others agents can reduce this time by specializing in the processing of particular types of information when these returns to specialization outweigh costs of communication it is efficient for several agents to collaborate within a firm it is shown that efficient networks involve centralization that individuals delegate tasks to subordinates only if they are overloaded and that the number of transits to the top tends to be equalized across individual information items

the subsidiarity bias in regulation abstract we study the choice of the regulatory structure when a firm engages in different activities for different countries under decentralization regulatory contracts suffer from two opposite distortions the competition between regulatory authorities leads to too high powered contracts however with a dispersed ownership structure contracts tend to be too low powered for sufficiently substitutable activities decentralization always leads to an inefficient drift towards fixed price contracts nonetheless when regulators have private agendas and possess the discretion to distort their policy to gain the support of some interest groups decentralization may be preferred to centralization as competition between regulatory authorities mitigates their discretionary power

ownership and control rights in internet portal alliances 1995 1999 we examine the structure of more than 100 alliances by internet portals and other firms between 1995 to 1999 from a contract theory perspective models of incomplete contracts frequently invoke unforeseen contingencies the cost of writing contracts and the cost of enforcing contracts in justifying the assumption of incompleteness the setting in which internet portals formed alliances was rife with these sorts of transaction costs we argue that these alliances can be viewed as incomplete contracts and find that the division of ownership and the allocation of control rights are consistent with the incomplete contracting literature copyright 2003 by the rand corporation

preferences for power abstract power the ability to determine the outcomes of others usually comes with various benefits higher compensation public recognition etc we develop a new game the power game to demonstrate that a substantial fraction of individuals enjoy the intrinsic value of power they accept lower payoffs in exchange for power over others without any benefits to themselves these preferences exist independently of other components of decision rights cannot be explained by social preferences and are not driven by mistakes confusion or signaling intentions we further show that valuation of power i is higher when individuals directly determine outcomes of others ii depends on how much discretion one has over those outcomes and iii is tied to relationships between individuals we establish that ignoring preferences for power may have large welfare implications and consequently should be included in the study of political systems and labor contracts

costly communication and learning from failure in organizational coordination abstract this paper investigates the coordination failure that arises from combining two small pre existing groups and focuses on the reaction of group members to this change in environment in an experiment small groups were first able to establish a coordination history in a repeated minimum effort game in the second phase two groups with different histories were combined into a larger group unlike most of the previous literature subjects could endogenously choose to communicate in the newly formed group for a small fee while communication proved to be necessary for preventing coordination failure in the newly formed group only every second subject was willing to implement communication particularly subjects from groups with a less efficient coordination experience in the first phase were more likely to realize the potential of coordination failure in the new group and were thus more likely to decide for communication the results may be useful for understanding how groups coordinate in changing environments as they are common in economic contexts

income inequality and pollution a reassessment of the environmental kuznets curve abstract improvements in some measures of air and water quality can accompany rising per capita income as illustrated by the so called environmental kuznets curve for pollution variables which show such a relationship we hypothesize that a more equitable distribution of power contributes to these outcomes by enhancing the influence on policy of those who bear the costs of pollution relative to the influence of those who benefit from pollution generating activities an empirical analysis of international variations in seven indicators of air and water quality supports this hypothesis literacy political rights and civil liberties are found to have particularly strong effects on environmental quality in low income countries

incentives information and organizational form we model an organization as a hierarchy of managers erected on top of a technology here consisting of a collection of plants in our framework the role of a manager is to take steps to reduce the adverse consequences of shocks that affect the plants beneath him we argue that different organizational forms give rise to different information about managers performance and therefore differ according to how effective incentives can be in encouraging a good performance in particular we show that under certain assumptions the m form multi divisional form is likely to provide better incentives than the u form unitary form because it promotes yardstick competition i e relative performance evaluation more effectively we conclude by presenting evidence that the assumptions on which this comparison rests are satisfied for chinese data

effects of political institutions on air quality we empirically test existing theories on the provision of public goods in particular air quality using data on sulfur dioxide so2 concentrations from the global environment monitoring projects for 107 cities in 42 countries from 1971 to 1996 the results are as follows first we provide additional support for the claim that the degree of democracy has an independent positive effect on air quality second we find that among democracies presidential systems are more conducive to air quality than parliamentary ones third in testing competing claims about the effect of interest groups on public goods provision in democracies we establish that labor union strength contributes to lower environmental quality whereas the strength of green parties has the opposite effect

looking for a theory of the firm future challenges in this paper we present the main developments of the theories of the firm rooted in coase s coase r h 1937 the nature of the firm economica new series 4 386 405 seminal article we show that the two important topics of the nature and boundaries of the firm as well as the internal organization of the firm give place to essential contributions we present those contributions and their limits and then their possible developments finally we introduce the papers of this issue

leadership coordination and corporate culture what is the role of leaders in large organizations we propose a model in which a leader helps to overcome a misalignment of followers incentives that inhibits coordination while adapting the organization to a changing environment good leadership requires vision and special personality traits such as conviction or resoluteness to enhance the credibility of mission statements and to eectively rally agents around them resoluteness allows leaders to overcome