Interest Alignment, Delegation of Authority and Economic Rent : A Collection of Empirical Papers

Sammanfattning: “Authority allocation in hierarchies, a literature overview”: This paper gives an overview of literature dealing with authority allocation in hierarchies. It gives an overview on how different branches of research derive concepts of optimal authority allocation taking into account human behaviour.“Authority allocation and alignment of interest”: This paper is the first one to show how delegation of power and interest alignment needs to go hand in hand in order for employees to exert effort and thus increase company performance. The experiment is based on the partial restructuring of an electricity grid operator in Scandinavia where identification strategy is based on using a subset of teams that were not affected by the reorganization.“Authority allocation and geographic dispersion”: This paper shows empirically that proximity or ease of access from divisions to headquarters can affect the allocation of authority and company performance. I find that managers that are selected via a centralized process have significantly higher probability of being selected if they work in relative proximity to the head quarters. I also show that authority is more easily delegated to geographically accessible units and that these tend to show higher effort levels.“Do utilities in the German electricity market extract economic rent?” This paper­ uses a framework developed by Kreps and Scheinkman [1983] to show there is significant evidence that the integrated network- energy- supply companies in Germany may have succeeded to use their dominating market position in order to extract economic rent, by engaging in a strategic retirement of power plants, thus counteracting the aim of lower­ energy prices through competition in a liberalized market.