Working Papers

This paper studies a dynamic model of a financial market with some large, strategic traders. These traders are risk-averse and exchange a risky asset for hedging purposes. The only private information in the model concerns their hedging demands.…

A collective goods program, such as an entitlement program distributes benefits and costs according to constituents’ characteristics, and many such programs are outside the appropriations process and continue in effect until changed by future…

Using a framework analogous to models of the term structure of interest rates, an intertemporal rational expectations equilibrium for the term structure of lease rates is developed. While active firms lease existing units of an underlying real…

Data for a sample of 558 CEOs over 1985-1990 suggest substantial compensation premia for managers of diversified firms. The CEO of a firm with two distinct lines of business averages 10 to 12 percent more in salary and bonus and 13 to 17 percent…

This paper presents a model in which owners choose the optimal mix of tenants. Tenant types are broadly defined to include not only the standard distinctions (office, retail, industrial, residential), but also more subtle distinctions such as the…

This paper studies contracting between a principal, a prime contractor, and a subcontractor when both the prime contractor and the subcontractor have private information about their own costs of producing complementary inputs. Side-contracting…

In the past few decades, a number of alternative media and promotion options have emerged by which marketers can communicate to consumers. A modern marketing communications program might consist of television, radio, magazine, and newspaper…

We present a new methodology for studying the problem of intrafirm bargaining, based on the notion that contracts cannot commit the firm and its agents to wages and employment. In particular, we analyze a general bargaining game between the firm…

The organization of the value chain in the computer industry is undergoing profound change. The nature of this change is carcatured in two contrasting market models. In the “vertical” market model, large vertically integrated vendors of propriety…

We explore the critical linkages between attributes of manufacturing strategy and attributes of marketing strategy. Generic linkages drawn from a significant managerial sample are presented and discussed. A second, independent sample is used to…

A model of vacancy rate determination is estimated using over thirty years of data for twenty U.S. office markets. The variances of individual city office vacancy rates are decomposed into common, time-varying components and city-specific fixed…

Throughout the world, returns policies are widespread in distribution. They are usually justified as a way of insuring retailers against excess inventory. We demonstrate that returns policies can increase manufacturer profitability even in the…

Marketing costs respresent a significantly large component of the cost structure in many industries. Relative to research on manufacturing costs, however, marketing costs have received very little attention in the accounting literature. In the…

This paper studies the economic forces which shape the diversity of an organization over time. We introduce a direct connection between a worker’s attributes (such as gender or cultural background) and her productivity in a given firm.…

A dependent variable which is a discrete response causes the estimated coefficients to be inconsistent in a probit or logit model when misclassification is present. By’misclassification’ we mean that the response is reported or recorded in the…

Using an option pricing approach, this paper develops a model of a firm’s optimal investment strategy when confronted with a sequence of technological innovations. There are several key features of the model. First, successive innovations of…

Organizational change can be usefully conceptualized in terms of both its process and its content. Process refers to how change occurs. Content describes what actually changes in the organization. Theories and analyzes of organizational change…

We consider a wide number of applications of an intrafirm bargaining game within organizations where employees and the owner of a firm’s assets engage in wage negotiations. Under our presumption that contracts cannot serve to bind employees to…

We study why functional departments within companies, such as the marketing and manufacturing departments, have different preferences regarding what their firm should do. We then analyze why these disagreements lead to overt conflict. Finally,…

The process model of strategic business exit (SBE) maps the activities of different levels of management onto the business and corporate levels of strategy making involved in Intel Corporation’s exit from the dynamic random access memory (DRAM)…