TY - JOUR
T1 - Partnerships versus corporations
T2 - Moral hazard, sorting, and ownership structure
AU - Kaya, Ayça
AU - Vereshchagina, Galina
PY - 2014/1
Y1 - 2014/1
N2 - Team production takes advantage of technological complementarities but comes with the cost of free-ridership. When workers differ in skills, the choice of sorting pattern may be associated with a nontrivial trade-off between exploiting the technological complementarities and minimizing the cost of free-ridership. This paper demonstrates that whether such a trade-off arises depends (i) on how the power of incentives required for effort provision varies with workers' types, and (ii) on whether the workers are organized for production in partnerships or in corporations. These results have implications for how production is organized in different industries-in partnerships or in corporations.
AB - Team production takes advantage of technological complementarities but comes with the cost of free-ridership. When workers differ in skills, the choice of sorting pattern may be associated with a nontrivial trade-off between exploiting the technological complementarities and minimizing the cost of free-ridership. This paper demonstrates that whether such a trade-off arises depends (i) on how the power of incentives required for effort provision varies with workers' types, and (ii) on whether the workers are organized for production in partnerships or in corporations. These results have implications for how production is organized in different industries-in partnerships or in corporations.
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U2 - 10.1257/aer.104.1.291
DO - 10.1257/aer.104.1.291
M3 - Article
AN - SCOPUS:84892597638
SN - 0002-8282
VL - 104
SP - 291
EP - 307
JO - American Economic Review
JF - American Economic Review
IS - 1
ER -