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The Firm as a Pool of Factor Complementarities

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  • Lindbeck, Assar

    ()
    (Institute for International Economic Studies, Stockholm University)

  • Snower, Dennis

    ()
    (Birkbeck College, University of London, CEPR and IZA Bonn)

Abstract

This paper presents a new approach to the theory of the firm by identifying factor complementarities as central to the determination of the firm’s boundaries. The factor complementarities may take a variety of forms: technological and informational complementarities, as well as economies of scale and scope. We examine the tradeoff between the gains from these complementarities and transactions costs. In so doing, we must abandon the standard dichotomy between the determinants of plant size and firm size. The influence of factor complementarities on firm size is examined in partial and general equilibrium frameworks.

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Bibliographic Info

Paper provided by Stockholm University, Institute for International Economic Studies in its series Seminar Papers with number 725.

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Length: 17 pages
Date of creation: 10 Jun 2003
Date of revision:
Handle: RePEc:hhs:iiessp:0725

Note: IZA Discussion Paper No 882, Bonn October 2003
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Postal: Institute for International Economic Studies, Stockholm University, S-106 91 Stockholm, Sweden
Phone: +46-8-162000
Fax: +46-8-161443
Web page: http://www.iies.su.se/
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Keywords: firm; complementarities; plant;

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References

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  1. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn.
  2. Lindbeck, Assar & Snower, Dennis J., 1997. "Reorganization of Firms and Labor Market Inequality," Seminar Papers 605, Stockholm University, Institute for International Economic Studies.
  3. Mathias Dewatripont & Patrick Bolton, 2004. "The firm as a communication network," ULB Institutional Repository 2013/9599, ULB -- Universite Libre de Bruxelles.
  4. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
  5. Armen A. Alchian & Harold Demsetz, 1971. "Production, Information Costs and Economic Organizations," UCLA Economics Working Papers 10A, UCLA Department of Economics.
  6. Oliver Hart & Sanford Grossman, 1985. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Working papers 372, Massachusetts Institute of Technology (MIT), Department of Economics.
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Citations

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Cited by:
  1. Alla Lileeva & Johannes Van Biesebroeck, 2008. "Outsourcing when Investments are Specific and Complementary," NBER Working Papers 14477, National Bureau of Economic Research, Inc.
  2. Ryan, Michael & Raff, Horst, 2007. "Firm-Specific Characteristics and the Timing of Foreign Direct Investment Projects," Economics Working Papers 2007,22, Christian-Albrechts-University of Kiel, Department of Economics.
  3. Aurora García-Gallego & Nikolaos Georgantzís & Joan Martín-Montaner & Teodosio Pérez-Amaral, 2012. "(How) Do research and administrative duties affect university professors’ teaching?," Documentos del Instituto Complutense de Análisis Económico 2012-22, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales.
  4. Werner Hölzl, 2005. "The evolutionary theory of the firm: Routines, complexity and change," Working Papers geewp46, Vienna University of Economics Research Group: Growth and Employment in Europe: Sustainability and Competitiveness.
  5. Madalina Constantinescu, 2008. "Knowledge Management Through The Lens Of Innovation And Labour Productivity In A Knowledge Based Economy," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 3(2(4)_Summ).
  6. Riccardo Leoni & Giuseppe Usai, 2004. "Organizations Between Systemic and Epistemological Complexities. An Introduction," Rivista di Politica Economica, SIPI Spa, vol. 94(1), pages 3-25, January-F.
  7. Arvanitis, Spyros & Loukis, Euripidis N., 2009. "Information and communication technologies, human capital, workplace organization and labour productivity: A comparative study based on firm-level data for Greece and Switzerland," Information Economics and Policy, Elsevier, vol. 21(1), pages 43-61, February.

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