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

Dalia Marin and Thierry Verdier

Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems from Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich

Abstract: Recent years have witnessed an enormous amount of reorganization of the corporate sector in the US and in Europe. This paper examines the role of market competition for this trend in 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. Thus, workers empowerment and the move to flatter firm organizations 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 into the world economy as the corporate sector reorganizes in response to an increase in international competition.

Keywords: monopolistic competition; international trade; corporate reorganisation; flattening firm hierarchies (search for similar items in EconPapers)
JEL-codes: D23 F12 L1 L22 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-bec, nep-com, nep-int and nep-mic
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (12)

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https://epub.ub.uni-muenchen.de/13442/1/109.pdf (application/pdf)

Related works:
Journal Article: 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 (2008)
Working Paper: Power Inside the Firm and the Market: a General Equilibrium Approach (2002)
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