TY  - JOUR
AU  - Hart,Oliver
AU  - Moore,John
TI  - On the Design of Hierarchies: Coordination Versus Specialization
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7388
PY  - 1999
Y2  - October 1999
UR  - http://www.nber.org/papers/w7388
L1  - http://www.nber.org/papers/w7388.pdf
N1  - Author contact info:
Oliver D. Hart
Department of Economics
Littauer Center 220
Harvard University
Cambridge, MA 02138
Tel: 617/496-3461
Fax: 617-495-7730
E-Mail: ohart@harvard.edu

John Moore
William Robertson Building
Edinburgh
Scotland, EH8 9JY
U.K.
E-Mail: j.h.moore@ed.ac.uk
AB  - We develop a model of hierarchies based on the allocation of authority.  A firm's owners have ultimate authority over a firm's decisions, but they have limited time or capacity to exercise this authority.  Hence owners must delegate authority to subordinates.  However, these subordinates also have limited time or capacity and so further delegation must occur.  We analyze the optimal chain of command given that different agents have different tasks: some agents are engaged in coordination and others in specialization.  Our theory throws light on the nature of hierarchy, the optimal degree of decentralization, and the boundaries of the firm.
ER  -