Modeling the Division of Managerial Responsibilities Between Segments of a Supply Chain

Paul F. Phumpiu and Robert King

No 259752, Miscellaneous Publications from University of Minnesota, Department of Applied Economics

Abstract: This paper examines how firms in a supply chain can optimally choose the organizational form that governs their business transactions. Alternative organizational forms are characterized by the allocation of managerial decision rights, by information flows, and by transaction cost levels. We focus on the case where one firm or operating division bases its choice of organizational form on: its own costs and capabilities for information gathering and use, the quality of information provided by its trading partner, noise in information transmission channels, the relative importance of investments in site­specific assets and market information, and institutional factors that affect the costs of making transactions under different organizational forms. The model is used to explain observed patterns of organizational change in the U.S. retail food industry.

Keywords: Industrial Organization; Institutional and Behavioral Economics (search for similar items in EconPapers)
Pages: 7
Date: 1998-05-28
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Persistent link: https://EconPapers.repec.org/RePEc:ags:umaemp:259752

DOI: 10.22004/ag.econ.259752

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