How to control market power of activity centers ? A theoretical model showing the advantages of implementing competition within organizations

• Tipo: Artigo em Revista Científica Internacional
• Data: 2007

Autores

Pedro Cosme da Costa Vieira (Autor) FEP; Samuel Alves Pereira (Autor) FEP

Revista

Título: Economics Bulletin

Vol. 7 Nº 6

Páginas: 1-8

ISSN: 1545-2921

Editora: Economics Bulletin

Indexação

Scopus - 0 Citações

Econlit

Classificação Científica

FOS: Ciências sociais > Economia e gestão

CORDIS: Ciências Sociais > Economia > Ciência financeira

Outras Informações

ID Authenticus: P-008-ND9

Abstract (EN): One important issue in firms’ governance is how to create incentives so that activity centres can become more efficient. In this paper, we first introduce an agency contract where the salary of the manager of an activity centre that produces an intermediate product is dependent of its performance. Secondly, we add competition within the organization. This latter point is new in the literature. We then develop a "static analysis" comparing a firm that has only one activity centre producing an intermediate product with another firm that has two activity centres producing the same intermediate product, in a context where the technology manifests increasing returns to scale. We conclude that the introduction of internal competition makes the firm globally more efficient, even though it cannot fully explore the existence of increasing returns to scale.

Idioma: Português

Tipo (Avaliação Docente): Científica