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Can the theory of incentives explain decentralization?

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  • Michel Poitevin

Abstract

This survey presents within a single model three theories of decentralization of decision-making within organizations based on private information and incentives. Renegotiation, collusion, and limits on communication are three sufficient conditions for decentralization to be optimal. Cet article présente dans un cadre unifié un survol de trois théories de la décentralisation de la prise de décision dans les organisations. Ces théories reposent sur la présence d'information privée et des incitations qui en découlent. La renégociation, la collusion et les limites à la communication représentent trois conditions suffisantes pouvant expliquer l'optimalité de la décentralisation.
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Suggested Citation

  • Michel Poitevin, 2000. "Can the theory of incentives explain decentralization?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 33(4), pages 878-906, November.
  • Handle: RePEc:wly:canjec:v:33:y:2000:i:4:p:878-906
    DOI: 10.1111/0008-4085.00046
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    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure

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