We show that the separation of powers in regulation may act as a commitment against the threat of regulatory capture. Splitting regulatory tasks and monitoring technologies among several non-benevolent regulators may reduce their discretion in engaging in socially wasteful activities. When...

This paper discusses the origins of the transaction costs in side-contracting. In Tirole (1986)'s model of collusion with a risk averse supervisor, the optimal collusion-proof contract trades-off coalitional incentives against an insurance motive. We characterize the corresponding agency cost...

We discuss the internal organization of the firm, arguing that the comparison between a centralized and a decentralized hierarchical organization should be cast in terms of the agency costs associated with the different side-contracting games that agents play in these organizations. In our...