I develop a property rights theory of the firm in which managers bargain over the sharing of quasirents in the presence of private information. I analyze the interdependence between the ownership structure of firms and the bargaining inefficiency that is due to the presence of private...

We examine the relationship between the organization of a firm and its ability to adapt to changes in the environment. We show that even if lower-level managers have superior information about their local conditions, and incentive conflicts are negligible, a centralized organization can be...