Market Structure and Organizational Form

Market Structure and Organizational Form

By:	Zhou, Haiwen
Abstract:	This paper studies the determinants of a firm’s organizational form in the context of an imperfectly competitive industry. There are two kinds of organizational forms: the multi-divisional form (M-form) and the unitary form (U-form). An M-form firm suffers from ignorance of demand externalities among different products and double marginalization is eliminated. In contrast, in a U-form firm, demand externalities are taken into consideration and double marginalization exists. A firm’s optimal choice of organizational form depends on the market structure.
URL:	http://d.repec.org/n?u=RePEc:pra:mprapa:96882&r=com