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The Rise and Decline of the East German Economy, 1949-1989

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  • Blum, U.
  • Dudley, L.

Abstract

Why do some organizations decline while other do not? to study this issue , we introduce technological change into a theory of agency proposed by Laffont and Tirole. We show that the optimal organizational form for production depends on the estent of scale ecoomies and on the cost of monitoring workers. When the discrepancy between ideal and actual forms becomes too great, an organization's viability is threatened. We test this structuralist hypothesis for East and west Gemany over the 1949-1989 period. east Germany's relative decline is explained by an institutional structure the proved incompatible with technological change favoring smaller, flatter organizations.

Suggested Citation

  • Blum, U. & Dudley, L., 1996. "The Rise and Decline of the East German Economy, 1949-1989," Cahiers de recherche 9616, Universite de Montreal, Departement de sciences economiques.
    • Handle: RePEc:mtl:montde:9616
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    File URL: http://hdl.handle.net/1866/2084
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    Cited by:

    1. Michael Wyrwich & Ina Krause, 2011. "Coping with the market: Are there cohort effects for organisations in transition?," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 16(1), pages 54-74.
    2. Amigues, Jean-Pierre & Favard, Pascal & Gaudet, Gerard & Moreaux, Michel, 1998. "On the Optimal Order of Natural Resource Use When the Capacity of the Inexhaustible Substitute Is Limited," Journal of Economic Theory, Elsevier, vol. 80(1), pages 153-170, May.

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