Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5066836 | European Economic Review | 2014 | 18 Pages |
Abstract
Team production is a frequent feature of modern organizations. Combined with team incentives, team production can create externalities among workers, since their utility upon accepting a contract depends on their team׳s performance and therefore on their colleagues׳ productivity. We study the effects of such externalities in a competitive labor market if workers have private information on their productivity. We find that in any competitive equilibrium there must be Pareto-efficient separation of workers according to their productivity. We further find that externalities facilitate equilibrium existence, where under a particular condition on workers׳ indifference curves even arbitrarily small externalities guarantee equilibrium existence.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Ferdinand A. von Siemens, Michael Kosfeld,