Firms, Organization, and Capital Market Frictions
Firms and other organizations are typically modeled in economics as a function that combines some set of inputs to produce desired output. Such organizations, in the real world, are often constrained relative to such a simple model by frictions in output markets, frictions in the input markets, and internal frictions due to sub-optimal organization. The first of these frictions (output markets) are perhaps the best explored in the literature. As such, my work seeks to add to the literature exploring the latter two issues. The first chapter of this dissertation examines firm organizational structure as a coordination game with private information, and demonstrates conditions where joint ventures between firms should be favored over mergers. The second chapter examines religious organizations using a club good model where members have norm-based utility functions, and finds a large variety of equilibirium organizational models. The final chapter is a search model of physical capital markets, allowing for search-in-use (an analog to search-on-the-job in macro-labor models), which shows two channels by which capital market frictions can diminish growth. Together, the papers represent the beginning of a research path examining previously neglected constraints on economic growth.