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Increasing Returns to Size and Their Limits

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  • Guesnerie, Roger
  • Oddou, Claude

Abstract

A model of organization is proposed in which factors for increasing returns to size and factors for decreasing returns to size are in co nflict. The former effect reflects standard efficiency gains associat ed with economies of scale. The latter arises from inefficiencies (which are modeled in a crude way) in decision making of large organization s. Generalizing their previous work, the authors give a criterion, the existence of n-multilateral merging agreements, which is reasonably simple in view of the complexity of the problem and ensures that increasing returns unambiguously dominate decreasing returns. The bas ic result is then extended in several directions. Copyright 1988 by The editors of the Scandinavian Journal of Economics.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Scandinavian Journal of Economics.

Volume (Year): 90 (1988)
Issue (Month): 3 ()
Pages: 259-73

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Handle: RePEc:bla:scandj:v:90:y:1988:i:3:p:259-73

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Web page: http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467-9442

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Cited by:
  1. BOGOMOLNAIA, Anna & LE BRETON, Michel & SAVVATEEV, Alexei & WEBER, Shlomo, 2006. "Heterogeneity gap in stable jurisdiction structures," CORE Discussion Papers 2006036, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  2. Gabrielle Demange, 2005. "Group formation: The interaction of increasing returns and preferences' diversity," Post-Print halshs-00573563, HAL.
  3. Jacques, DREZE & Michel, LE BRETON & Alexei , SAVVATEV & Sholmo, WEBER, 2007. "‘Almost’ subsidy-free spatial pricing in a multi-dimensional setting," Discussion Papers (ECON - Département des Sciences Economiques) 2007030, Université catholique de Louvain, Département des Sciences Economiques.
  4. Gabrielle Demange, 2004. "On Group Stability in Hierarchies and Networks," Journal of Political Economy, University of Chicago Press, vol. 112(4), pages 754-778, August.
  5. Le Breton, Michel & Weber, Shlomo, 2003. "The Art of Making Everybody Happy : How to Prevent a Secession," IDEI Working Papers 164, Institut d'Économie Industrielle (IDEI), Toulouse.
  6. Le Breton, Michel & Weber, Shlomo, 2004. "Group Formation with Heterogeneous Sets," IDEI Working Papers 288, Institut d'Économie Industrielle (IDEI), Toulouse.
  7. D. Fiaschi & P. M. Pacini, 1998. "Endogenous Coalition Formation With Identical Agents," Working Papers 309, Dipartimento Scienze Economiche, Universita' di Bologna.
  8. LE BRETON, Michel & WEBER, Shlomo, 2001. "The art of making everybody happy: how to prevent a secession," CORE Discussion Papers 2001011, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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