In many industries, one important method of diffusion is through employee mobility: many of the entering firms are started by employees from incumbent firms using some of their former employer's technological know‐how. This article explores the effect of incorporating this mechanism in a general industry framework by allowing employees to imitate their employers' know‐how. The equilibrium is Pareto optimal because the employees “pay” for the possibility of learning their employers' know‐how. The model's implications are consistent with data from the rigid disk drive industry. These implications concern the effects of know‐how on firm formation and survival.

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We describe a real-world profit sharing contract-the movie exhibition contractand consider alternative explanations for its use. Two explanations based on difficulties with forecasting fit the facts better than asymmetric information models. The first emphasizes two-sided risk aversion; the second emphasizes measurement costs. Transaction costs and long-term relationships also affect contractual practices. We use an original data set of all exhibition contracts involving 13 theaters owned by a prominent St. Louis exhibitor over a two-year period to inform our theories and test hypotheses. The findings question traditional contract theory and may be relevant for other contracting environments. (JEL L14, L82, D45, D80)

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte.

Recent research suggests that democracies have advantages and disadvantages in wars. Democracies are more likely to win the wars they initiate and the ones in which they are targeted. Wars initiated by democracies are also uniformly shorter and less costly than wars initiated by nondemocracies. However, democracies are also less likely to continue fighting and less likely to win as war drags on. Democracies are also particularly likely to be targeted. We present a bargaining model that reconciles these divergent findings. The model explains why democracies are more likely to win but are also more likely to settle and more likely to be targeted than other types of regimes. The model's explanation of these facts differs in important ways from existing explanations. The model also suggests several new hypotheses relating regime type to the terms of settlement and the onset of war.