A Note on the Optimal Structure of Production
AbstractWe analyze the advantages of centralization and decentralization in industries in which production takes place in several stages and the costs are privately observed by the agents in charge of production. We demonstrate that "informational diseconomies" arise when uncorrelated information is concentrated in the hands of a single agent. These diseconomies arise when the stages of production are different activities with different cost supports.
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- Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
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