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Production, Planning and Prices

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  • George B. Richardson

Abstract

Firms do not exist because of the cost of using the price mechanism, but because they enable actions to be carried out concurrently in conformity with a particular design. This concurrent coordination, which production requires, is distinct from the evolutionary coordination, which is the unintended consequence of market transactions. The two processes are alternatives only to a limited extent. Evolutionary adjustment cannot bring about concurrent coordination, and irreducible uncertainty limits the scope of the planning which does.

Suggested Citation

  • George B. Richardson, 1998. "Production, Planning and Prices," DRUID Working Papers 98-27, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:98-27
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    References listed on IDEAS

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    1. Nicolai J. Foss, 1998. "Firms and the Coordination of KnowledgeSome Austrian Insights," DRUID Working Papers 98-19, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
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    Cited by:

    1. Peter Maskell & Mark Lorenzen, 2004. "The Cluster as Market Organisation," Urban Studies, Urban Studies Journal Limited, vol. 41(5-6), pages 991-1009, May.

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    More about this item

    Keywords

    price mechanism; transaction costs coordination;

    JEL classification:

    • D51 - Microeconomics - - General Equilibrium and Disequilibrium - - - Exchange and Production Economies
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights

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