(11) As main independent variable we use quasi rent per worker as in Van Reenen (1996) and Card et al.
[QR.sub.j(i),t] is our variable of interest, the logarithm of quasi rent per employee.
If she reports the breach, then she risks being fired by the client, in which case all the client-specific quasi rent stream will be forfeited.
If [P.sub.detect], or [alpha] is higher for large clients, then it is possible that the quasi rent ratio exceeds [P.sub.detect] [alpha]/[P.sub.fire] for clients in certain size groups but not for others.
To Klein, Crawford, and Alchian, the risk of opportunism in the GM-Fisher Body relationship lay in the investment in large stamp dies: "The manufacture of dies for stamping parts in accordance with the above specifications gives a value to these dies specialized to [the assembler], which implies an appropriable quasi rent in those dies.
First, the parties trade in "customized parts." Second, the parties can produce these customized parts efficiently only by investing in "relation-specific skills." Third, through those skills they produce a "relational quasi rent" and -- to return to the original point -- that rent creates an incentive to maintain the relationship long-term.
Hence the term "quasi rent
." The rental price, on the other hand, is the ex ante cost of acquiring the right to use the capital good for a stipulated period of time.
Starting with the representative producer's profit function we consider changes in quasi rents
([DELTA]R) induced from the multiple price change:
Analogous to the solution of the fishers' profit maximization problem under a one-pie split, surviving processors are those who earn unit quasi rents
greater than the unit processing quota price, that is, [Mathematical Expression Omitted] .
Monopolistic pricing of a specialized asset necessary for final consumption or production of the commonly owned amenity resource would lead to the same rent maximization as would private ownership.(3) This result follows because the monopolistic supplier of a specialized asset is in a position to capture quasi rents
from joint production.
The discussion then turns to the use of insurance to increase the firm's quasi rents
. The final section of the article explains the phenomenon of insurance internalization.
This discussion begins introducing concepts that lie at the foundation of the transactions cost theory of the firm; concepts such as asset specificity, opportunistic behavior, quasi rents
, residual claimants, and asymmetric information.