Organizing Modular Production

Niko Matouschek, Michael Powell and Bryony Reich

Journal of Political Economy, 2025, vol. 133, issue 3, 986 - 1046

Abstract: Products are increasingly made by assembling separately produced modules. Motivated by the notion that a firm’s production function drives its organization, we explore how modular production shapes a firm’s communication structure. Decisions are partitioned into modules and require closer coordination within modules than across. Each agent knows the state his decision must be adapted to. The principal decides whom each agent tells about his state, given that each communication link comes at a cost. We show that optimal communication networks follow a simple threshold rule and exhibit the threshold property. We discuss comparative statics, applications, and empirical implications.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
http://dx.doi.org/10.1086/733424 (application/pdf)
http://dx.doi.org/10.1086/733424 (text/html)
Access to the online full text or PDF requires a subscription.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ucp:jpolec:doi:10.1086/733424

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().