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Title:Shutdown contests in multi-plant firms and governmental intervention PDF Logo
Authors:Kräkel, Matthias
Issue Date:2010
Series/Report no.:Bonn econ discussion papers 2010,3
Abstract:When a multi-plant firm must close one unit due to declining demand it can choose between two alternatives. On the one hand, the firm can announce a certain span of time in which the plants are evaluated according to relative performance with the least performing plant being shut down in the end (shutdown contest). On the other hand, the firm can use given information on the plants' productivitis and close thelast productive unit. This paper analyzes the selection and incentive properties of both alternatives. Multi-plant firms often operate in an international industry. Hence, in a second step we discuss the effects of governmental support for domestic plants on selection efficiency.
Subjects:auction
collective tournament
plant closing
governmental intervention
JEL:D21
D61
F23
F51
J65
Document Type:Working Paper
Appears in Collections:Bonn Econ Discussion Papers, Bonn Graduate School of Economics (BGSE), Universität Bonn

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