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Ownership of firms and efficiency: The competence argument

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  • Pavel Pelikan
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    Abstract

    To assess alternative forms of ownership of firms and allocation of capital, the standard incentive argument is complemented and qualified by an argument considering competence. Regarding capital as a currency conveying decision authority for organizing production, this argument recognizes that the competence for exercising this authority is scarce. The allocation of this competence is studied as the key part of the allocation of scarce economic competence, which requires organizational change and determines the efficiency of allocation of all scarce resources, including economic competence itself. Comparative institutional analysis reveals the superiority of a constitution that requires private and tradeable ownership of firms and open entry to capital markets in the organization of supply, while it limits economic inequalities and provides for policies intervening in competence-requiring final demand. Copyright George Mason University 1993

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    File URL: http://hdl.handle.net/10.1007/BF02393268
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    Bibliographic Info

    Article provided by Springer in its journal Constitutional Political Economy.

    Volume (Year): 4 (1993)
    Issue (Month): 3 (September)
    Pages: 349-392

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    Handle: RePEc:kap:copoec:v:4:y:1993:i:3:p:349-392

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    Web page: http://www.springerlink.com/link.asp?id=102866

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    1. David E. M. Sappington & Joseph E. Stiglitz, 1987. "Privatization, information and incentives," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 6(4), pages 567-585.
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    Cited by:
    1. Larry Kiser, 1994. "A constitutional theory of public enterprise," Constitutional Political Economy, Springer, vol. 5(3), pages 287-306, September.
    2. Pelikan, Pavel, 1999. "Institutions for the Selection of Entrepreneurs: Implications for Economic Growth and Financial Crises," Working Paper Series 510, Research Institute of Industrial Economics, revised 15 Feb 2000.
    3. Pelikan, Pavel, 1997. "Allocation of Economic Competence in Teams: A Comparative Institutional Analysis," Working Paper Series 480, Research Institute of Industrial Economics.
    4. Dan Johansson, 2004. "Economics without Entrepreneurship or Institutions: A Vocabulary Analysis of Graduate Textbooks," Econ Journal Watch, Econ Journal Watch, vol. 1(3), pages 515-538, December.
    5. Henrekson, Magnus & Johansson, Dan & Stenkula, Mikael, 2010. "Taxation, Labor Market Policy and High-Impact Entrepreneurship," Ratio Working Papers 149, The Ratio Institute.
    6. Mulligan, Robert F., 2004. "Fractal analysis of highly volatile markets: an application to technology equities," The Quarterly Review of Economics and Finance, Elsevier, vol. 44(1), pages 155-179, February.
    7. Henrekson, Magnus & Johansson, Dan, 2010. "Firm Growth, Institutions and Structural Transformation," Working Paper Series 820, Research Institute of Industrial Economics.
    8. Nicolai J. Foss, 1999. "Capabilities, Confusion, and the Costs of Coordination On Some Problems in Recent Research On Inter-Firm Relations," DRUID Working Papers 99-7, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.

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