Multiple Facilities, Strategic Splitting and Vertical Structures : Stability, Growth and Distribution Reconsidered

This paper explores comparative cost structures when large firms split operations between separate production facilities in a way that puts pressure on wage rates and worker effort levels: one example of a divide and rule strategy. It differentiates horizontal structures of this kind based on requirements for stability in a context of growing aggregate production vis-a-vis wages and effort. The analysis is formulated within a more general perspective that also considers vertical structures. It considers the implications for contemporary policy debates on desirable industrial forms, and concludes with a discussion of factors that might limit the scope for policies intended to promote industrial stability and redistribution via existing production networks