The firm II

Readings due before class on Wednesday, February 20, 2019

Required

• 6.8-6.14 in Economy, Society, and Public PolicyThe CORE Team, Economy, Society, and Public Policy, 2019, https://www.core-econ.org/espp/.
  
  
• Oliver Hart and Andrei Shleifer and Robert W. Vishny, “The Proper Scope of Government: Theory and an Application to Prisons”Oliver Hart, Andrei Shleifer, and Robert W. Vishny, “The Proper Scope of Government: Theory and an Application to Prisons,” The Quarterly Journal of Economics 112, no. 4 (November 1997): 1127–1161, doi:10.3386/w5744.
  
  
  • Note: This is really dense and the middle is full of equations. You can skip those. Read the introduction, discussion, and conclusion and make sure you understand the gist of the article.
• Look at these real-life examples of information asymmetries and principal-agent problems:
  • Sam Dolnick, “Air-Conditioners That Run When Nobody’s Home,” New York Times, August 15, 2010
  • Ceci Connolly, “U.S. worker’s case reveals how drug cartels get help from this side of border,” Washington Post, September 12, 2010
  • Rob Ferguson, “Ontario’s winter roads ‘less safe’ since privatization: auditor,” The Star, April 29, 2015