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Restructuring or Delegating: Which Is Better?


  • Manel Antelo

    (Departamento de Fundamentos da Análise Económica. Universidade de Santiago de Compostela.)

  • Lluís Bru

    (Departamento de Teoría e Historia Económica. Universidad de Málaga.)


In a certain industry, a given firm is operating with high costs of production and does not know if this is because the production costs in this industry are intrinsically high or because it is inefficient. To resolve this uncertainty, it must choose between continuing to produce correcting the inefficiency by itself (restructuring) or transfering a part or all its business to another firm of the same industry which is already efficient (subcontracting or delegating). Furthermore, regarding the policies of delegating, we consider two, temporary delegation (renting) and definitive delegation (selling). This paper justifies the existence of policies both of restructuring and subcontracting in a context of asymmetric information.

Suggested Citation

  • Manel Antelo & Lluís Bru, 2001. "Restructuring or Delegating: Which Is Better?," Documentos de trabajo - Analise Economica 0019, IDEGA - Instituto Universitario de Estudios e Desenvolvemento de Galicia.
  • Handle: RePEc:edg:anecon:0019

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    References listed on IDEAS

    1. James J. Anton & Dennis A. Yao, 1992. "Coordination in Split Award Auctions," The Quarterly Journal of Economics, Oxford University Press, vol. 107(2), pages 681-707.
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    More about this item


    Delegation; Transfer of production; Restructuring;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment; Related Parts and Equipment

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