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Journal of Law, Economics, and Organization
Journal Prestige (SJR): 1.585
Citation Impact (citeScore): 1
Number of Followers: 49  
  Hybrid Journal Hybrid journal (It can contain Open Access articles)
ISSN (Print) 8756-6222 - ISSN (Online) 1465-7341
Published by Oxford University Press Homepage  [396 journals]
  • Backscratching in Hierarchical Organizations
    • Authors: Maggian V; Montinari N, Nicolò A.
      Pages: 133 - 161
      Abstract: We experimentally investigate the role of reciprocity in sustaining the emergence of implicit collusive agreements in hierarchical organizations. We show that when an agent hires, on behalf of the principal, one worker out of two candidates: (i) low ability workers, being less entitled to be selected, are more likely to exert effort in a task that is exclusively beneficial to the agent; (ii) as a consequence, agents distort the hiring process in favor of low ability workers; and (iii) sharing a small part of the organization’s profits with the workers alleviates their effort distortion
      PubDate: Tue, 27 Feb 2018 00:00:00 GMT
      DOI: 10.1093/jleo/ewy006
      Issue No: Vol. 34, No. 2 (2018)
  • The Causal Effects of Competition on Innovation: Experimental Evidence
    • Authors: Aghion P; Bechtold S, Cassar L, et al.
      Pages: 162 - 195
      Abstract: We design two laboratory experiments to analyze the causal effects of competition on step-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by the ex post rents for firms that operate at the same technological level, that is, for neck-and-neck firms. First, we find that increased competition leads to a significant increase in R&D investments by neck-and-neck firms. Second, increased competition decreases R&D investments by firms that are lagging behind, in particular if the time horizon is short. Third, we find that increased competition affects industry composition by reducing the fraction of sectors where firms are neck-and-neck. All these results are consistent with the predictions of step-by-step innovation models.
      PubDate: Sat, 03 Mar 2018 00:00:00 GMT
      DOI: 10.1093/jleo/ewy004
      Issue No: Vol. 34, No. 2 (2018)
  • Earnings Inequality and Coordination Costs: Evidence from US Law Firms
    • Authors: Garicano L; Hubbard T.
      Pages: 196 - 229
      Abstract: Using evidence from confidential Census data on US law offices, we study the extent to decreases in coordination costs are responsible increases in earnings inequality among lawyers. We show that inequality increased substantially between 1977 and 1992, and that partner-associate ratios changed in ways consistent with the hypothesis that coordination costs fell during this period. We then propose a “hierarchical production function” and estimate its parameters in each period. We find that coordination costs fell over time, so that hiring one’s first associate leveraged a partner’s skill by about 30% more in 1992 than 1977. We find also that changes in lawyers’ hierarchical organization account for about two-third of the increase in earnings inequality among lawyers in the upper tail, but much less of the increase between lawyers in the upper tail and other lawyers. New organizational efficiencies potentially explain increases in inequality among lawyers, especially among the highest earners.
      PubDate: Tue, 03 Apr 2018 00:00:00 GMT
      DOI: 10.1093/jleo/ewy005
      Issue No: Vol. 34, No. 2 (2018)
  • On the Trade-off between Efficiency in Job Assignment and Turnover: The
           Role of Breakup Fees
    • Authors: Mukherjee A; Vasconcelos L.
      Pages: 230 - 271
      Abstract: We highlight a novel trade-off with the use of breakup fees in employment contracts. Under asymmetric learning about workers’ productivity, the market takes job assignments (or “promotions”) as a signal of quality and bids up the wages of a promoted worker, leading to inefficiently few promotions (Waldman, M. 1984. “Job Assignments, Signalling, and Efficiency” 15 RAND Journal of Economics 255–67). Breakup fees can mitigate such inefficiencies by shielding the firm from labor-market competition, but they reduce turnover efficiency when there are firm-specific matching gains. We show that it is optimal to use breakup fees if and only if the difference between the worker’s expected productivity in the pre- and post-promotion jobs is small. Also, the relationship between the optimality of breakup fees and the importance of firm-specific human capital is more nuanced than what the extant literature may suggest.
      PubDate: Thu, 22 Feb 2018 00:00:00 GMT
      DOI: 10.1093/jleo/ewy003
      Issue No: Vol. 34, No. 2 (2018)
  • Global Arms Trade and Oil Dependence*
    • Authors: Bove V; Deiana C, Nisticò R.
      Pages: 272 - 299
      Abstract: We investigate how oil dependence affects the trade of weapons between countries. We argue that oil-dependent economies have incentives to transfer arms to oil-rich countries to reduce their risk of instability and, as a result, the chances of disruption in the oil industry. We employ gravity models of the arms trade and estimate the effect of both a local as well as a global oil dependence. Two key results emerge. First, the volume of arms transfers to a specific country is affected by the degree of dependence on its supply of oil. Second, global oil dependence motivates arms export to oil-rich countries even in absence of a direct bilateral oil-for-weapons exchange. Our results point consistently toward the conclusion that the arms trade is an effective foreign policy tool to securing and maintaining access to oil.
      PubDate: Mon, 19 Mar 2018 00:00:00 GMT
      DOI: 10.1093/jleo/ewy007
      Issue No: Vol. 34, No. 2 (2018)
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