Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/189385 
Year of Publication: 
2006
Series/Report no.: 
Queen's Economics Department Working Paper No. 1109
Publisher: 
Queen's University, Department of Economics, Kingston (Ontario)
Abstract: 
This paper presents a theory of the allocation of authority in an organization in which centralization is limited by the agent's ability to disobey the principal. We show that workers are given more authority when they are costly to replace or do not mind looking for another job, even if they have no better information than the principal. The allocation of authority thus depends on external market conditions as well as the information and agency problems emphasized in the literature. Evidence from a national survey of organizations shows that worker autonomy is related to separation costs as the theory predicts.
Subjects: 
Delegation
Authority
Separation Costs
Optimal employment contracts
JEL: 
J63
M5
Document Type: 
Working Paper

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