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Organizing multiple related tasks into jobs: Diversification vs. competition

Nina Baranchuk

Economics Letters, 2008, vol. 99, issue 3, 599-603

Abstract: Agency models of multiple tasks typically assume independent outcomes. We show that correlation between outcomes can generate both economy and diseconomy of scale through diversification and competition effects. Additionally, the optimal compensation is non-monotone if the correlation is large.

Date: 2008
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Handle: RePEc:eee:ecolet:v:99:y:2008:i:3:p:599-603