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Two Propositions on the Theory of the Firm

We explore intra-firm interactions among workers and managers, when both have explicit preferences over production relations. In particular, we address the role of uncertainty with heterogeneous agents and discuss the institutional setting, by exploring the connection between economic democracy and efficiency. Our model allows for the explicit inclusion of ex post haggling cost (in the form of coordination cost). We discuss robustness of optimal collaboration and how the institutional settings can promote it.