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Thinking about the Firm: A Review of Daniel Spulber's The Theory of the Firm

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  • Oliver Hart

Abstract

In this review, I describe how economists have moved beyond the firm as a black box to incorporate incentives, internal organization, and firm boundaries. I then turn to the way that the theory of the firm is treated in Daniel Spulber's book The Theory of the Firm: Microeconomics with Endogenous Entrepreneurs, Firms, Markets, and Organizations . Spulber's goal is to explain why firms exist, how they are established, and what they contribute to the economy. To accomplish this, Spulber defines a firm to be a transaction institution whose objectives differ from those of its owners. For Spulber, this separation is the key difference between the firm and direct exchange between consumers. I raise questions about whether this is a useful basis for a theory of the firm. (JEL D21)

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Bibliographic Info

Article provided by American Economic Association in its journal Journal of Economic Literature.

Volume (Year): 49 (2011)
Issue (Month): 1 (March)
Pages: 101-13

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Handle: RePEc:aea:jeclit:v:49:y:2011:i:1:p:101-13

Note: DOI: 10.1257/jel.49.1.101
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Cited by:
  1. Thomas J. Miceli, 2014. "Transaction-Specific Investments and Organizational Choice: A Coase-to-Coase Theory," Working papers, University of Connecticut, Department of Economics 2014-06, University of Connecticut, Department of Economics.
  2. Schmitz, Patrick W., 2013. "Investments in physical capital, relationship-specificity, and the property rights approach," MPRA Paper 45243, University Library of Munich, Germany.
  3. Lechmann, Daniel S. J. & Schnabel, Claus, 2011. "Are the self-employed really jacks-of-all-trades? Testing the assumptions and implications of Lazear's theory of entrepreneurship with German data," IWQW Discussion Paper Series 11/2011, Friedrich-Alexander-Universität Erlangen-Nürnberg, Institut für Wirtschaftspolitik und Quantitative Wirtschaftsforschung (IWQW).
  4. Paul Walker, 2013. "The ‘Reference Point’ Approach To The Theory Of The Firm: An Introduction," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 27(4), pages 670-695, 09.
  5. Dimitri O. Ledenyov & Viktor O. Ledenyov, 2013. "On the theory of firm in nonlinear dynamic financial and economic systems," Papers 1302.6721, arXiv.org, revised Mar 2013.
  6. Carmen Marcuello & Pablo Nachar-Calderón, 2012. "Sociedad cooperativa y socio cooperativo: propuesta de sus funciones objetivo," Documentos de Trabajo, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza dt2012-02, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.
  7. Buehler, Stefan & Burghardt, Dirk, 2013. "Globalization and Vertical Structure: An Empirical Investigation," Economics Working Paper Series 1310, University of St. Gallen, School of Economics and Political Science.

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