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Increasing Returns to Size and Their Limits

  • Guesnerie, Roger
  • Oddou, Claude

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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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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