E-Commerce Investigate

Does Product Market Competition Lead Firms To Decentralize?

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Executive Summary

In this paper the authors investigate whether greater product market competition increases decentralization. To tackle the issues they collected detailed information on the internal organization of firms across nations. The few datasets that exist are either from a single industry or (at best) across many firms in a single country. They analyze data on almost 4,000 firms across twelve countries in Europe, North America and Asia. They find that competition does indeed seem to foster greater decentralization.

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