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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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File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jel.49.1.101
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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. 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.
  2. Schmitz, Patrick W, 2013. "Investments in physical capital, relationship-specificity, and the property rights approach," CEPR Discussion Papers 9396, C.E.P.R. Discussion Papers.
  3. Thomas J. Miceli, 2014. "Transaction-Specific Investments and Organizational Choice: A Coase-to-Coase Theory," Working papers 2014-06, University of Connecticut, Department of Economics.
  4. Paul Walker, 2013. "The ‘Reference Point’ Approach To The Theory Of The Firm: An Introduction," Journal of Economic Surveys, Wiley Blackwell, vol. 27(4), pages 670-695, 09.
  5. Daniel Lechmann & Claus Schnabel, 2014. "Are the self-employed really jacks-of-all-trades? Testing the assumptions and implications of Lazear’s theory of entrepreneurship with German data," Small Business Economics, Springer, vol. 42(1), pages 59-76, January.
  6. 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.
  7. Carmen Marcuello & Pablo Nachar-Calderón, 2012. "Sociedad cooperativa y socio cooperativo: propuesta de sus funciones objetivo," Documentos de Trabajo dt2012-02, Facultad de Ciencias Económicas y Empresariales, Universidad de Zaragoza.

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