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Internalizing Team Production Externalities through Delegation: The British Passenger Rail Sector as an Example

Author

Listed:
  • RAFAEL HORTALA‐VALLVE
  • MIGUEL SANCHEZ VILLALBA

Abstract

We show that in situations of team production, the associated externality between workers can be partially internalized via the delegation of authority of contracting rights, thus improving the overall efficiency of organizations. A delegated structure provides further incentives to individuals in higher tiers of the hierarchy because it makes them residual claimants. Our model sheds light on recent debates about the organization of the British passenger rail sector.

Suggested Citation

  • Rafael Hortala‐Vallve & Miguel Sanchez Villalba, 2010. "Internalizing Team Production Externalities through Delegation: The British Passenger Rail Sector as an Example," Economica, London School of Economics and Political Science, vol. 77(308), pages 785-792, October.
    • Handle: RePEc:bla:econom:v:77:y:2010:i:308:p:785-792
    DOI: 10.1111/j.1468-0335.2009.00787.x
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    References listed on IDEAS

    as
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    Cited by:

    1. Felli, Leonardo & Hortala-Vallve, Rafael, 2016. "Collusion, Blackmail and Whistle-Blowing," Quarterly Journal of Political Science, now publishers, vol. 11(3), pages 279-312, October.
    2. Barlo, Mehmet & Ayca, Ozdogan, 2012. "Team beats collusion," MPRA Paper 37449, University Library of Munich, Germany.
    3. Leonardo Felli, 1996. "Preventing Collusion Through Discretion," STICERD - Theoretical Economics Paper Series /1996/303, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    4. Mehmet Barlo & Ayça Özdoğan, 2013. "The Optimality of Team Contracts," Games, MDPI, vol. 4(4), pages 1-20, November.
    5. Yinghui Chen & Xiaolin Gong & Chien-Chi Chu & Yang Cao, 2018. "Access to the Internet and Access to Finance: Theory and Evidence," Sustainability, MDPI, vol. 10(7), pages 1-38, July.

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