We present a dynamic agency model in which changes in the structure of a firm affect its value due to altered incentives. There may be disadvantages in merging two firms even when such a merger allows the internalization of externalities between the two firms. Merging, by making unprofitable...

We present a dynamic agency model in which changes in the structure of a firm affect its value due to altered incentives. There may be disadvantages in merging two firms even when such a merger allows the internalization of externalities between the two firms. Merging, by making unprofitable...

In McLean and Postlewaite (2001), we analyzed a general equilibrium model with asymetrically informed agents. We presented a notion of informational size and showed (among other things) that when agents' information as a whole resolved nearly all the uncertainty, the conflict between incentive...

"Buy local" arrangements encourage members of a community or group to patronize one another instead of the external economy. They range from formal mechanisms such as local currencies to informal "I'll buy from you if you buy from me" arrangements and are often championed on social or...