The value of information and optimal organization
AbstractThe article addresses the issue of optimal organization of production. I compare three organizational forms: centralization (one agent produces different inputs), decentralization (each of two agents produces a different input and contracts directly with the principal), and delegation (two agents produce different inputs, the principal contracts with one of them only). The optimal organizational form depends on the degree of complementarity/substitutability between the inputs in the final use. The degree of complementarity/substitutability also determines whether delegation is payoff equivalent to the two-agent mechanism from the point of view of the principal. In the context of delegation, I consider which of the two agents should serve as the primary contractor. I also address the issue of collusion between the agents in a decentralized organization and characterize the conditions under which a stake of collusion exists. Copyright (c)2008, RAND.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by RAND Corporation in its journal The RAND Journal of Economics.
Volume (Year): 39 (2008)
Issue (Month): 1 ()
Contact details of provider:
Postal: 1776 Main Street, P.O. Box 2138, Santa Monica, California 90407-2138
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0741-6261
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Tangerås, Thomas P., 2010.
"Optimal Transmission Regulation in an Integrated Energy Market,"
Working Paper Series
838, Research Institute of Industrial Economics.
- Tangerås, Thomas P., 2012. "Optimal transmission regulation of an integrated energy market," Energy Economics, Elsevier, vol. 34(5), pages 1644-1655.
- Celik, Gorkem, 2004. "Counter Marginalization of Information Rents under Collusion," Microeconomics.ca working papers celik-04-01-23-02-48-07, Vancouver School of Economics, revised 27 Jan 2008.
- Te Bao & Yongqin Wang, 2012. "Incomplete contract, bargaining and optimal divisional structure," Journal of Economics, Springer, vol. 107(1), pages 81-96, September.
- Rosar, Frank, 2013. "Optimal procurement and outsourcing of production in small industries," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79812, Verein für Socialpolitik / German Economic Association.
- Celik, Gorkem, 2009.
"Mechanism design with collusive supervision,"
Journal of Economic Theory,
Elsevier, vol. 144(1), pages 69-95, January.
- Te Bao & Yongqin Wang, 2009. "Incomplete Contract and Divisional Structures," Tinbergen Institute Discussion Papers 09-075/1, Tinbergen Institute.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If references are entirely missing, you can add them using this form.