Power Inside the Firm and the Market. A General Equilibrium Approach

Arbeitspapier

Recent years have witnessed an enormous amount of reorganization of the corporate sector in the US and in Europe. This paper examines the role of market competition for this trend in corporate reorganization. We find that at intermediate levels of competition the CEO of the corporation decides to have less power inside the firm and to delegate control to lower levels of the firms’ hierarchy. Thus, workers empowerment and the move to flatter firm organizations emerge as an equilibrium when competition is not too tough and not too weak. The model predicts merger waves or waves of outsourcing when countries become more integrated into the world economy as the corporate sector reorganizes in response to an increase in international competition.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Munich Discussion Paper ; No. 2002-6

Classification and Topics

• Classification: Wirtschaft ; Organizational Behavior; Transaction Costs; Property Rights ; Firm Organization and Market Structure
• Subject: monopolistic competition ; corporate reorganisation ; theory of the firm ; allocation of control

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Marin, Dalia ; Verdier, Thierry
• Event: Veröffentlichung
• (who): Ludwig-Maximilians-Universität München, Volkswirtschaftliche Fakultät
• (where): München
• (when): 2002

Further information

• DOI: doi:10.5282/ubm/epub.10
• Handle: http://hdl.handle.net/10419/104095
• URN: urn:nbn:de:bvb:19-epub-10-4
• Last update: 10.03.2025, 11:42 AM CET