Collusion and the Organization of the Firm

Alfredo Burlando and Alberto Motta

American Economic Journal: Microeconomics, 2015, vol. 7, issue 3, 54-84

Abstract: This paper shows that the threat of collusion between a productive agent and the auditor in charge of monitoring production can influence a number of organizational dimensions of the firm, including outsourcing decisions and the allocation of production costs. We find that the optimal organizational response to internal collusion lets the agent choose between working outside the firm with no monitoring, or working within the firm with monitoring. In equilibrium, there are no rents due to collusion and the efficient worker works outside the firm. The results are robust to a number of extensions. (JEL D21, D43, D82, D86, L12, L13)

JEL-codes: D21 D43 D82 D86 L12 L13 (search for similar items in EconPapers)
Date: 2015
Note: DOI: 10.1257/mic.20130067
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Citations: View citations in EconPapers (13)

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