Information and the Division of Labour: Implications for the Firm's Choice of Organisation

Martin J Carter

Economic Journal, 1995, vol. 105, issue 429, 385-97

Abstract: This paper provides a partial analysis of the organizational problem that arises from decentralized information within the firm. Firm members possessing different decision-relevant information can communicate in different ways, leading to a taxonomy of organizational structures with different effectiveness and costs. It is shown that, with usual assumptions about the form of the payoff function and the stochastic nature of information, the decision functions and the expected profit for different organizations have a simple linear form, comprising a small number of information value parameters. Copyright 1995 by Royal Economic Society.

Date: 1995
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