IDEAS home Printed from https://ideas.repec.org/a/rje/randje/v18y1987iwinterp480-491.html
   My bibliography  Save this article

Market Structure and Optimal Management Organizations

Author

Listed:
  • Clive Bull
  • Janusz A. Ordover

Abstract

This article focuses on the decisionmaking role of management under the assumption that managers are fallible and thus make honest decision errors. In our model the owner of the firm must decide how to structure management, how many managers to hire, and what decisionmaking rule to adopt to determine whether to proceed with a randomly chosen project, given that individual managers are only stochastically correct in their evaluations. We find that the decision rule for rejecting projects is independent of the degree of competition in the product market, but that the size of the organization is not. Furthermore, because competition among firms leads to resampling rejected projects, it results in long-run inefficiencies that are avoided in more concentrated markets.

Suggested Citation

  • Clive Bull & Janusz A. Ordover, 1987. "Market Structure and Optimal Management Organizations," RAND Journal of Economics, The RAND Corporation, vol. 18(4), pages 480-491, Winter.
    • Handle: RePEc:rje:randje:v:18:y:1987:i:winter:p:480-491
    as

    Download full text from publisher

    File URL: http://links.jstor.org/sici?sici=0741-6261%28198724%2918%3A4%3C480%3AMSAOMO%3E2.0.CO%3B2-A&origin=repec
    File Function: full text
    Download Restriction: Access to full text is restricted to JSTOR subscribers. See http://www.jstor.org for details.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Raaj Kumar Sah, 1991. "Fallibility in Human Organizations and Political Systems," Journal of Economic Perspectives, American Economic Association, vol. 5(2), pages 67-88, Spring.
    2. Peter-J. Jost & Frauke Lammers, 2009. "The organization of project evaluation under competition," Review of Managerial Science, Springer, vol. 3(2), pages 141-155, July.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rje:randje:v:18:y:1987:i:winter:p:480-491. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://www.rje.org .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.