Open source software, developed by volunteers, appears counter to the conventional wisdom that without ownership rights or government intervention, public goods will not be efficiently provided. But complexity makes a difference: contracts are incomplete and ownership rights do not necessarily elicit socially optimal effort. I consider three mechanisms that improve the provision of complex soft...

This paper proposes a new approach to explain the long-term evolution of a supplier industry. The network of vertical relations between suppliers and buyers is identified as a determinant of the concentration of the supplier industry and of the dynamics of market shares. The vertical structure of the industry is captured by collecting information on all vertical relations between dyads of firms...

We develop a model to study the implications of a legal environment on software development and international trade. We show that the degree of contract enforcement a®ects the organizational mode (i.e., in-house or outsourcing) of customized software development. In autarky, a country with weak copyright protection develops customized software only, while a country with strong copyright protect...

Coexistence of Strategic Vertical Separation and Integration by Jos Jansen This paper gives conditions under which vertical separation is chosen by some upstream firms, while vertical integration is chosen by others in the equilibrium of a symmetric model. A vertically separating firm trades off fixed contracting costs against the strategic benefit of writing a (two-part tariff, exclusive deale...

This paper examines the determinants of intra-firm trade in US imports using detailed country-product data. We create a new measure of product contractibility based on the degree of intermediation in international trade for the product. We find important roles for the interaction of country and product characteristics in determining intra-firm trade shares. Intra-firm trade is high for products...

Corporate organization varies within countries and between countries. We develop a theory which explains the variation in levels of decentralization across firms and links it to the trade environment that firms face. We introduce firms with internal hierarchies in a Melitz and Ottaviano (2008) model of international trade. We show that international trade increases the conflict of interest betw...

A fundamental question for economics is why large firms in market economies usually assign control rights to capital suppliers rather than labor suppliers. A diverse collection of answers can be found in the literature. But unfortunately little theoretical consensus has emerged, and few attempts have been made to resolve this issue through systematic empirical investigation. This paper reviews ...

Empirical research has shown tremendous productivity di erences, even within narrowly de ned industries. A great host of studies is explainsing this productivity disparity by factors such as idiosyncratic technology shocks, input price di erences, management skills, or international trade. Although these explanations are undoubtedly important, the current paper suggests that product diversi cat...

ABSTRACT Cross-border alliances expose firms to heightened risks, posing different governance and control challenges than domestic alliances. We examine the impact of differences in alliance partner countries' institutional environments. Analysis survey data supports our contention that cross-border involve a greater reliance on formal controls, particularly when collaborate with partners count...