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Internalizing team production externalities through delegation: the British passenger rail sector as an example

By Rafael Hortala-Vallve and Miguel Sanchez-Villalba

Abstract

We show that in situations of team production, the associated externality between workers can be partially internalized via the delegation of authority of contracting rights, thus improving the overall efficiency of organizations. A delegated structure provides further incentives to individuals in higher tiers of the hierarchy because it makes them residual claimants. Our model sheds light on recent debates about the organization of the British passenger rail sector

Topics: HD28 Management. Industrial Management, HE Transportation and Communications
Publisher: Wiley-Blackwell
Year: 2009
DOI identifier: 10.1111/j.1468-0335.2009.00787.x
OAI identifier: oai:eprints.lse.ac.uk:28654
Provided by: LSE Research Online
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