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Management Quality and Firm Hierarchy in Industry Equilibrium†

Management Quality and Firm Hierarchy in Industry Equilibrium† AbstractI incorporate a monitoring-based firm hierarchy into an industry equilibrium model with heterogeneous firms. I then use the theory to study aggregate impacts of an economy-wide improvement in monitoring efficiency. This shock generates a selection effect, which favors more hierarchical (i.e., more layers) firms. Interestingly, these implications depend on firms' heterogeneous choices about their hierarchy and completely disappear when firms are homogeneous in terms of the number of layers inside the hierarchy. (JEL D21, L23, L25, M12, M54) http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png American Economic Journal: Microeconomics American Economic Association

Management Quality and Firm Hierarchy in Industry Equilibrium†

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References (39)

Publisher
American Economic Association
Copyright
Copyright © 2017 © American Economic Association
ISSN
1945-7685
DOI
10.1257/mic.20160305
Publisher site
See Article on Publisher Site

Abstract

AbstractI incorporate a monitoring-based firm hierarchy into an industry equilibrium model with heterogeneous firms. I then use the theory to study aggregate impacts of an economy-wide improvement in monitoring efficiency. This shock generates a selection effect, which favors more hierarchical (i.e., more layers) firms. Interestingly, these implications depend on firms' heterogeneous choices about their hierarchy and completely disappear when firms are homogeneous in terms of the number of layers inside the hierarchy. (JEL D21, L23, L25, M12, M54)

Journal

American Economic Journal: MicroeconomicsAmerican Economic Association

Published: Nov 1, 2017

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