Toward a Unified Transaction Cost Theory of Economic Organization
AbstractThis paper develops a general equilibrium model endogenizing labor specialization, firm size, firm specialization, interfirm trade, and economic fragmentation. In contrast to the standard neoinstitutionalist understanding of firms and markets as substitutes in organizing production, firms and markets are shown to be complements in reaping economies to the division of labor. As a result, firm size varies directly, rather than inversely, with the extent of interfirm trade. Growth is facilitated by increases in the complexity of economic organization, involving increases in the division of labor, the size and specialization of firms, market size, and the complexity of interfirm trade.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 159 (2003)
Issue (Month): 3 (September)
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Find related papers by JEL classification:
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
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- Davis, Lewis S., 2010. "Institutional flexibility and economic growth," Journal of Comparative Economics, Elsevier, vol. 38(3), pages 306-320, September.
- Davis, Lewis S., 2008. "Scale effects in growth: A role for institutions," Journal of Economic Behavior & Organization, Elsevier, vol. 66(2), pages 403-419, May.
- Davis, Lewis S., 2006. "Growing apart: The division of labor and the breakdown of informal institutions," Journal of Comparative Economics, Elsevier, vol. 34(1), pages 75-91, March.
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