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Market Structure and Organizational Form

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  • Haiwen Zhou

Abstract

This article studies the determinants of a firm's organizational form in the context of an imperfectly competitive industry. There are two kinds of organizational forms: the multidivisional form (M‐form) and the unitary form (U‐form). An M‐form firm suffers from ignorance of demand externalities among different products and double marginalization is eliminated. In contrast, in a U‐form firm, demand externalities are taken into consideration and double marginalization exists. A firm's optimal choice of organizational form depends on the market structure.

Suggested Citation

  • Haiwen Zhou, 2005. "Market Structure and Organizational Form," Southern Economic Journal, John Wiley & Sons, vol. 71(4), pages 705-719, April.
  • Handle: RePEc:wly:soecon:v:71:y:2005:i:4:p:705-719
    DOI: 10.1002/j.2325-8012.2005.tb00671.x
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    Cited by:

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    2. Gong, Binglin & Zhou, Haiwen, 2023. "The Choice of Technology and International Trade," MPRA Paper 116192, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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