Efficient coordination in large groups is a fundamental issue in economic organizations. We consider the weak-link game with the feature of economies of scale that is necessary for voluntary group growth, in a minimal setup with exit and merger options that allows for bi-directional changes in...

This paper uses a mechanism design without transfer approach to investigate the optimal communication mechanism in a two-division organization. The principal, with perfect commitment power on multiple decision rules, wants decisions to be both adapted to local conditions and coordinated with...