Document Type

Article

Journal/Book Title/Conference

Economics Research Institute Study Paper

Volume

35

Publisher

Utah State University Department of Economics

Publication Date

2000

Rights

Copyright for this work is held by the author. Transmission or reproduction of materials protected by copyright beyond that allowed by fair use requires the written permission of the copyright owners. Works not in the public domain cannot be commercially exploited without permission of the copyright owner. Responsibility for any use rests exclusively with the user. For more information contact the Institutional Repository Librarian at digitalcommons@usu.edu.

First Page

1

Last Page

30

Abstract

Single-plant firms choose quantity/quality levels to maximize profits. Multi-plant firms face this decision and must also choose how many decision makers to have. This paper presents two case studies and a model of a multi-plant firm in which overhead costs are lower with one decision-maker (centralization), but the mass of information and the need for timely decisions make occasional mixups unavaoidable. Multiple decision makers (decentralization) solves the mixup problem. Standardization-treating different outlets similarly in response to costly mixups-appears in the case studies, and is demonstrated as a result in the model.

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