The manner in which information is accumulated in the firm offers an explanation for the firm's existence. Information is an asset to the firm, for it affects the production possibility set and is produced jointly with output. We call this asset of the firm its organization capital. The costs of adjusting the stock of organization capital induce the firm to constrain its growth rate, thus explaining certain facts about firm growth and size distribution. Adjustment costs arise endogenously rather than being assumed.

The manner in which information is accumulated in the firm offers an explanation for the firm's existence. Information is an asset to the firm, for it affects the production possibility set and is produced jointly with output. We call this asset of the firm its organization capital. The costs of adjusting the stock of organization capital induce the firm to constrain its growth rate, thus explaining certain facts about firm growth and size distribution. Adjustment costs arise endogenously rather than being assumed.

This paper derives an econometrically meaningful test of the Tiebout hypothesis and demonstrates that previous tests are inappropriate. The implications generated by two closely related models of voter-determined local fiscal variables and individual resident housing choices are compared. We demonstrate that when the Tiebout mechanism operates without interference, housing quantity and location choices are Pareto efficient, while they are not when frictions interfere with its operation. We show that the appropriate test requires joint estimation of a set of structural equations determining housing purchases and locational choices utilizing data for both median and nonmedian voters across metropolitan area jurisdictions.

This paper derives an econometrically meaningful test of the Tiebout hypothesis and demonstrates that previous tests are inappropriate. The implications generated by two closely related models of voter-determined local fiscal variables and individual resident housing choices are compared. We demonstrate that when the Tiebout mechanism operates without interference, housing quantity and location choices are Pareto efficient, while they are not when frictions interfere with its operation. We show that the appropriate test requires joint estimation of a set of structural equations determining housing purchases and locational choices utilizing data for both median and nonmedian voters across metropolitan area jurisdictions.