This paper examines how the allocation of authority within an organization affects workers’ incentives and performance, using personnel data from a Chinese newspaper. Relying on an authority change that transferred the right of making editorial decisions from midlevel editors to top editors in four of the eight divisions in the newspaper, I find that the authority change improves reporters’ performance while reducing their activities for private gain and decreases midlevel editors’ journalistic initiative. To reconcile these findings, a synthesis of two theories on authority and incentives—the vertical and the horizontal allocation of authority—is needed.

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