Power Inside The Firm and The Market: A General Equilibrium Approach

Dalia Marin and Thierry Verdier

Journal of the European Economic Association, 2008, vol. 6, issue 4, 752-788

Abstract: Recent years have witnessed an enormous amount of reorganization of the corporate sector in the United States and Europe. This article examines the role of market competition in this trend of corporate reorganization. We find that, at intermediate levels of competition, the CEO of the corporation decides to have less power inside the firm and to delegate control to lower levels of the firms' hierarchy. Workers' empowerment and the move to a flatter organizational structure emerge as an equilibrium when competition is not too tough and not too weak. The model predicts merger waves or waves of outsourcing when countries become more integrated in the global economy as the corporate sector reorganizes in response to an increase in international competition. (JEL: F12, D23, L22, L1) (c) 2008 by the European Economic Association.

JEL-codes: D23 F12 L1 L22 (search for similar items in EconPapers)
Date: 2008
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Citations: View citations in EconPapers (52)

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Related works:
Working Paper: Power inside the firm and the market: A general equilibrium approach (2008)
Working Paper: Power inside the firm and the market: A general equilibrium approach (2008)
Working Paper: Power inside the firm and the market: A general equilibrium approach (2008)
Working Paper: Power Inside the Firm and the Market: A General Equilibrium Approach (2006)
Working Paper: Power Inside the Firm and the Market: a General Equilibrium Approach (2002)
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