Firms, Organizations and Contracts: A Reader in Industrial Organization

By Peter J. Buckley; Jonathan Michie | Go to book overview

Foreword

The editors of The Economics of Contracts and Industrial Organization have put us in their debt by compiling an extremely valuable collection of articles on a subject the importance of which has only recently been recognized. However, work on it is now going on apace in many countries and the issue of this book of readings is therefore timely.

What is this new subject? Williamson called it 'the new institutional economics' or 'transaction cost economics' and its scope is well described by the title of this book. The articles in Part I, "'The Theory of the Firm'", tell us about the origin and development of the ideas that were to produce 'transaction cost economics'. In my article "'The Nature of the Firm'" (published in 1937) I introduced the concept of transaction costs and the dichotomy of co-ordination through the market and within the firm. For reasons that are not altogether clear to me, it was not until the 1970s and 1980s that the subject came alive again. What followed in those years was the very influential series of articles reprinted in Part I that carried the analysis well beyond my earlier formulation. Ambiguities were removed, errors corrected, new concepts introduced. The articles in Part II, Markets and Industrial Organization, and III, Joint Ventures, Networks, Clans and Alliances, carried the story forward. In them the focus is expanded and new questions are raised. The importance of such factors as reputation, the organization form, relationships outside contract and inter-firm agreements of various kinds, is demonstrated. These articles make clear that we have travelled far from a simple choice between the firm and the market, and that what we have to understand is the functioning of an intricate interrelated institutional structure about which we are extremely ignorant. Dispelling this ignorance will be an immense task, but, in carrying it out, the guidance provided by the articles in this book of readings will be of the greatest help.

Ronald Coase

-xiii-

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Firms, Organizations and Contracts: A Reader in Industrial Organization
Table of contents

Table of contents

  • Title Page iii
  • Preface and Acknowledgements v
  • Acknowledgements vi
  • Contents viii
  • List of Contributors xi
  • Foreword xiii
  • Introduction and Overview 1
  • Notes 18
  • References 20
  • I. THEORY OF THE FIRM 21
  • 1: The Equilibrium of the Firm 23
  • 2: The Nature of the Firm 40
  • 3: The Organization of Industry 59
  • 4: Production, Information Costs, and Economic Organization 75
  • Summary 95
  • Notes 96
  • References 102
  • 5: Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure 103
  • Conclusions 151
  • Notes 151
  • References 163
  • 6: Transaction-Cost Economics: The Governance of Contractual Relations 168
  • Conclusion 192
  • 7: An Economist's Perspective on the Theory of the Firm 199
  • Conclusion 212
  • Notes 212
  • II. MARKETS AND INDUSTRIAL ORGANIZATION 219
  • 8: Corporate Culture and Economic Theory 221
  • Introduction 221
  • Conclusion 261
  • Appendix 262
  • Appendix 271
  • Appendix 273
  • References 274
  • 9: Co-operative Agreements and the Organization of Industry 276
  • References 292
  • 10: Interpenetration of Organization and Market: Japan's Firm and Market in Comparison with the US 293
  • Conclusion 317
  • References 319
  • 11: Vertical Quasi-Integration 320
  • Conclusions 336
  • Notes 337
  • 12: Non-Contractual Relations In Business: A Preliminary Study 339
  • 13: Goodwill and the Spirit of Market Capitalism 359
  • III. JOINT VENTURES, NETWORKS, AND] CLANS 383
  • III. JOINT VENTURES, NETWORKS, AND] CLANS 385
  • References 407
  • 15: Joint Ventures 410
  • Conclusion 427
  • References 428
  • 16: Organizations: New Concepts for New Forms 429
  • Conclusion 440
  • Notes 441
  • 17: Markets, Bureaucracies, and Clans 442
  • References 456
  • Notes 459
  • References 473
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