Munich Personal RePEc Archive

Market Structure and Organizational Form

Zhou, Haiwen (2019): Market Structure and Organizational Form. Published in: Southern Economic Journal , Vol. 71, No. 4 (2005): pp. 705-719.

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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.

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