MULTIPLE FACILITIES, STRATEGIC SPLITTING AND VERTICAL STRUCTURES: STABILITY, GROWTH AND DISTRIBUTION RECONSIDERED*

Dan Coffey and Philip Tomlinson ()

Manchester School, 2006, vol. 74, issue 5, 558-576

Abstract: This paper explores comparative cost structures when large firms split operations between separate production facilities in a way that puts pressure on wage rates and worker effort levels: one example of a ‘divide and rule’ strategy. It differentiates horizontal structures of this kind based on requirements for stability in a context of growing aggregate production vis‐à‐vis wages and effort. The analysis is formulated within a more general perspective that also considers vertical structures. It considers the implications for contemporary policy debates on desirable industrial forms, and concludes with a discussion of factors that might limit the scope for policies intended to promote industrial stability and redistribution via existing production networks.

Date: 2006
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