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The Firm as a Pool of Factor Complementarities

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  • Lindbeck, Assar

    ()
    (The Research Institute of Industrial Economics)

  • Snower, Dennis J.

    (Birkbeck College)

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 Research Institute of Industrial Economics in its series Working Paper Series with number 598.

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Length: 15 pages
Date of creation: 10 Jun 2003
Date of revision:
Handle: RePEc:hhs:iuiwop:0598

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Keywords: Boundary of Firm; Complementarities of Production; Transaction Costs;

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References

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  1. Bengt Holmstrom, 1981. "Moral Hazard in Teams," Discussion Papers 471, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  2. Lindbeck, Assar & Snower, Dennis J, 1996. "Reorganization of Firms and Labor-Market Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 315-21, May.
  3. Bolton, Patrick & Dewatripont, Mathias, 1994. "The Firm as a Communication Network," The Quarterly Journal of Economics, MIT Press, vol. 109(4), pages 809-39, November.
  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. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
  6. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-95, December.
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Cited by:
  1. 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.
  2. Alla Lileeva & Johannes Van Biesebroeck, 2008. "Outsourcing when Investments are Specific and Complementary," NBER Working Papers 14477, National Bureau of Economic Research, Inc.
  3. 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).
  4. 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.
  5. 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.
  6. Aurora García-Gallego & Nikolaos Georgantzís & Joan Martín-Montaner & Teodosio Pérez-Amaral, 2012. "(How) Do research and administrative duties affect university professors’ teaching?," Documentos de Trabajo del ICAE 2012-22, Universidad Complutense de Madrid, Facultad de Ciencias Económicas y Empresariales, Instituto Complutense de Análisis Económico.
  7. 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.

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