In the first specification, as benchmark estimates, we perform OLS estimates to derive the impact of quasi rents per worker on wages including only observed individual and firm characteristics.
South of Italy, the increase in wages due to rents might be compensated by the fact that average quasi rents in the South are lower than in the rest of Italy.
Starting with the representative producer's profit function we consider changes in quasi rents
([DELTA]R) induced from the multiple price change:
The economic theory of auditor independence (Watts and Zimmerman 1981; DeAngelo 1981b) suggests that auditors' incentives to compromise their independence are related to client importance, the ratio of quasi rents specific to the client divided by all other quasi rents.
(2,3) DeAngelo (1981b) shows that an auditor's incentive to compromise independence with respect to a client depends on client importance, i.e., the ratio of quasi rents specific to that client divided by the sum of all other quasi rents.
Crucially, investments specific to a relationship generate appropriable quasi rents. In a world of incomplete contracting, as Scott Masten, James Meehan, Jr., and Edward Snyder put it, that appropriability may increase the "resources expended attempting to negotiate a favorable distribution of the gains from trade."(3) In the words of Klein, Crawford, and Alchian themselves, "[a]fter a specific investment is made and such quasi rents are created, the possibility of opportunistic behavior is very real."(4) To avoid such rent-seeking and rent-avoidance costs, firms may sometimes introduce governance arrangements that are otherwise unnecessary (and probably problematic, given the way most of them weaken market incentives).
The crucial assumption underlying the analysis of this Article is that, as assets become more specific and more appropriable quasi rents are created (and therefore the possible gains from opportunistic behavior increases [sic]), the costs of contracting will generally increase more than the costs of vertical integration.
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] .
As before, Pareto safety requires comparing ITQ quasi rents and quota revenue with open access quasi rents for all industry participants.
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.