Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/36865
Authors: 
Kräkel, Matthias
Year of Publication: 
2010
Series/Report no.: 
Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 4852
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' productivities and close the least 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

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