The paper studies the determinants of delegation and authority within a principal-agent relation in which a non-contractible action has to be taken that affects both the principal and the agent. In contrast to previous literature we assume transferable utility and contractibility of messages. Under authority the principal uses the best message-contingent contract to elicit information from the agent and then chooses an action. Under delegation the agent chooses an action. We investigate when delegation outperforms authority. Furthermore, the impact of monetary transfers on the informativeness of communication is scrutinized. The model is relevant to the theory of firm boundaries.