Firms, queues, and coffee breaks: A flow model of corporate activity with delays

Benjamin Golub, R. Preston McAfee

Research output: Contribution to journalArticlepeer-review

1 Scopus citations

Abstract

The multidivisional firm is modeled as a system of interconnected nodes that exchange continuous flows of projects of varying urgency and queue waiting tasks. The main innovation over existing models is that the rate at which waiting projects are taken into processing depends positively on both the availability of resources and the size of the queue, capturing a salient quality of human organizations. A transfer pricing scheme for decentralizing the system is presented, and conditions are given to determine which nodes can be operated autonomously. It is shown that a node can be managed separately from the rest of the system when all of the projects flowing through it are equally urgent.

Original languageEnglish (US)
Pages (from-to)59-89
Number of pages31
JournalReview of Economic Design
Volume15
Issue number1
DOIs
StatePublished - Mar 2011
Externally publishedYes

Keywords

  • Decentralization
  • Queuing
  • Transfer pricing

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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