Competing Norms of Cooperation∗

A key question concerning social norms is whether norms, that are bad for its members, can survive. This paper proposes a theory of non-market interactions within organizations, in the presence of competition between them. The main finding is that in equilibrium, organizations differ, and that they have norms or corporate cultures that can be Pareto ranked. With non contractible effort, agents cannot credibly commit to cooperation when all outside options are equally good. Price competition naturally gives rise to authority relations within firms: seniors extract higher rents than entering juniors. However, authority is limited by competition and does not eradicate the stratification of norms