We introduce markup equilibrium—an extension of Walrasian equilibrium in which consumers pay a fixed percentage markup over producer prices. In quasilinear markets, markup equilibria exist despite nonconvexities. They are resource-feasible and envy-free, incur no budget deficit, and require little more communication and computation than ordinary Walrasian equilibrium. The associated markup mechanism is asymptotically incentive-compatible. We also introduce a Bound-Form First Welfare Theorem, which states that for any feasible allocation, the welfare loss compared to the first-best is bounded, using any price vector, by the sum of the resulting (i) budget surplus and (ii) rationing losses suffered by the participants. Using producer prices, this bound implies that any markup equilibrium with a small markup and few unallocated goods is nearly efficient.

[When changing jobs is costly, efficient employment contracts usually fail to compensate workers for the effects of posthiring events and decisions. Then, when there are executives and managers with authority to make discretionary decisions, affected employees will be led to waste valuable time trying to influence their decisions. Efficient organization design counters this tendency by limiting the discretion of decisions makers, especially for those decisions that have large distributional consequences but that are otherwise of little consequence to the organization.]

The LeChatelier principle, in the form introduced into economics by Paul A. Samuelson, asserts that at a point of long-run equilibrium, the derivative of long-run compensated demand with respect to own price is larger in magnitude than the derivative of short-run compensated demand. We introduce an extended LeChatelier principle that applies also to large price changes and to uncompensated demand as well as to a wide range of concave and nonconcave maximization problems outside the scope of demand theory. This extension also clarifies the intuitive basis of the principle.

We explore the twin hypotheses (i) that high-performance incentives, worker ownership of assets, and worker freedom from direct controls are complementary instruments for motivating workers, and (ii) that such instruments can be expected to covary positively in cross-sectional data. We also relate our conclusions to empirical evidence, particularly that on the organization, compensation, and management of sales forces.

We develop an ordinal approach to comparing the equilibria of economic models. Its main advantages over the traditional approach based on signing derivatives are that (i) it utilizes only a subset of the assumptions, resulting in a simpler theory that facilitates focusing attention on the economics rather than the mathematics, (ii) it applies to discrete changes, even when there are multiple equilibria and when some equilibria do not vary smoothly with the parameters, and (iii) it incorporates a formal theory of the robustness of conclusions to assumptions, which helps modelers distinguish which assumptions are "critical" to their comparative-statics conclusions.

Manufacturing is undergoing a revolution. The mass production model is being replaced by a vision of a flexible multiproduct firm that emphasizes quality and speedy response to market conditions while utilizing technologically advanced equipment and new forms of organization. Our optimizing model of the firm generates many of the observed patterns that mark modern manufacturing. Central to our results is a method of handling optimization and comparative statics problems that requires neither differentiability nor convexity.

We present a signaling model, based on ideas of Phillip Nelson, in which both the introductory price and the level of directly "uninformative" advertising or other dissipative marketing expenditures are choice variables and may be used as signals for the initially unobservable quality of a newly introduced experience good. Repeat purchases play a crucial role in our model. A second focus of the paper is on illustrating an approach to refining the set of equilibria in signalling games with multiple potential signals.