We propose that when managers require external investment to expand, higher skilled firms will be more likely to diversify, even though managers can exploit asymmetric information about their ability to raise capital from investors. We formalize this intuition in an equilibrium model and test...

An abstract filtering equation is derived for a partially observed system. An infinite series expansion is obtained for the best mean square estimate in terms of the iterated Ito integrals with respect to the innovation process.

"To what extent can market participants affect the outcomes of regulatory policy? In this paper, we study the effects of one potential source of influence-campaign contributions-from competing interests in the local telecommunications industry, on regulatory policy decisions of state public...

How are constitutional rules sustained? We investigate this problem in the context of how the institutions of federalism are sustained. As Riker (1964) emphasizes, a central design problem of federalism is how to create institutions that at once grant the central government enough authority to...

All federal systems face the two fundamental dilemmas of federalism: too strong a center risks overawing the subnational units; and too weak a center risks free-riding that makes the system fall apart. Resolving the two dilemmas is problematic because mitigating one dilemma exacerbates the...

This paper examines how the density and governance of vertically related populations affect the life chances of organizations. We integrate the literatures on organizational ecology and vertical integration to develop a theory of how (1) specialized upstream industries affect downstream survival...