On the Design of Hierarchies: Coordination versus Specialization

Oliver Hart and John Moore

Edinburgh School of Economics Discussion Paper Series from Edinburgh School of Economics, University of Edinburgh

Abstract: We consider an economy that has to decide how assets are to be used. Agents have ideas, but these ideas conflict. We suppose that decision-making authority is determined by hierarchy: each asset has a chain of command, and the most senior person with an idea exercises authority. We analyze the optimal hierarchical structure given that some agents coordinate and others specialize. Inter alia, our theory explains why coordinators should typically be senior to specialists, and why pyramidal hierarchies may be optimal. Our theory also throws light on the optimal degree of decentralization inside a firm and on firm boundaries.

Pages: 50
Date: 2005-05
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Citations: View citations in EconPapers (147)

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http://www.econ.ed.ac.uk/papers/id117_esedps.pdf

Related works:
Journal Article: On the Design of Hierarchies: Coordination versus Specialization (2005)
Working Paper: On the Design of Hierarchies: Coordination Versus Specialization (2005)
Working Paper: On the Design of Hierarchies: Coordination Versus Specialization (1999)
Working Paper: On the design of hierarchies: coordination versus specialization (1999)
Working Paper: On the Design of Hierarchies: Coordination Versus Specialization (1999)
Working Paper: On the Design of Hierarchies: Coordination Versus Specialization (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:edn:esedps:117

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