The firm as a communication network

Mathias Dewatripont and Patrick Bolton

ULB Institutional Repository from ULB -- Universite Libre de Bruxelles

Abstract: This paper analyzes how organizations can minimize costs of processing and communicating information. Communication is costly because it takes time for an agent to absorb new information sent by others. Agents can reduce this time by specializing in the processing of particular types of information. When these returns to specialization outweigh costs of communication, it is efficient for several agents to collaborate within a firm. It is shown that efficient networks involve centralization, that individuals delegate tasks to subordinates only if they are overloaded, and that the number of transits to the top tends to be equalized across individual information items. © 1994 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Date: 1994
Note: SCOPUS: ar.j
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Published in: The Quarterly Journal of Economics (1994) v.109,p.809-839

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Related works:
Working Paper: The firm as a communication network (2004)
Working Paper: The firm as a communication network (1996)
Journal Article: The Firm as a Communication Network (1994)
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