The Comparative Statics of Optimal Hierarchies
American Economic Journal: Microeconomics
vol. 11,
no. 2, May 2019
(pp. 1-25)
Abstract
Several classes of models of hierarchical organizations share two common properties: the characteristics at different levels of the hierarchy are complementary, but this complementarity does not extend beyond adjacent levels. We propose a unified yet simple approach to study comparative statics of organizational characteristics with endogenous number of hierarchical layers in all these models. We use this new approach to study organizational decision making, and show that increased delay cost incentivizes the organization to empower lower level employees more than upper level employees.Citation
Chen, Cheng, and Wing Suen. 2019. "The Comparative Statics of Optimal Hierarchies." American Economic Journal: Microeconomics, 11 (2): 1-25. DOI: 10.1257/mic.20170158Additional Materials
JEL Classification
- D21 Firm Behavior: Theory
- D23 Organizational Behavior; Transaction Costs; Property Rights
- L23 Organization of Production
- M10 Business Administration: General
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