original papers : Returns to scale in one-shot information processing when hours count
The decentralized information processing approach pioneered by Radner and Van Zandt endogenously determines the optimal hierarchy for decision making within an organization. The simplest information processing model is the one-shot problem (one set of information to process) which serves as the testing ground for ever richer descriptions of managers and their tasks. Meagher and Van Zandt observed that an hours-based measure should be used for calculating managerial costs rather than the fixed cost per employee used by Radner. Surprisingly they show that the set of efficient hierarchies is equivalent under the two different measures. In this paper we show that using the hours-based measure can give quite different results for returns to scale than were found by Radner. We find constant returns to scale over a wide range of delay costs, whereas Radner found increasing returns to scale: In other words, costs rise proportionally with the size of the firm's information problem. Constant returns to scale implies that distortions in firm size will not arise from the need for hierarchical organization per se, but rather from organizational issues from the theory of the firm, such as incentives and abilities.
If 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.
Volume (Year): 6 (2001)
Issue (Month): 1 ()
|Note:||Received: 20 May 1999 / Accepted: 12 May 2000|
|Contact details of provider:|| Web page: https://sites.google.com/site/societyforeconomicdesign/|
|Order Information:||Web: http://www.springer.com/economics/journal/10058|
When requesting a correction, please mention this item's handle: RePEc:spr:reecde:v:6:y:2001:i:1:p:113-124. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Rebekah McClure)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.