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The Firm as a Pool of Factor Complementarities

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Author Info
Lindbeck, Assar () (The Research Institute of Industrial Economics)
Snower, Dennis J. (Birkbeck College)

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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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Publisher 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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Postal: Research Institute of Industrial Economics, Box 55665, SE-102 15 Stockholm, Sweden
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Related research
Keywords: Boundary of Firm; Complementarities of Production; Transaction Costs;

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Find related papers by JEL classification:
D20 - Microeconomics - - Production and Organizations - - - General
D40 - Microeconomics - - Market Structure and Pricing - - - General
D80 - Microeconomics - - Information, Knowledge, and Uncertainty - - - General

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. 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. [Downloadable!] (restricted)
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  2. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law & Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
  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. [Downloadable!] (restricted)
  4. 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. [Downloadable!] (restricted)
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  5. 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.
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  6. Bengt Holmstrom, 1982. "Moral Hazard in Teams," Bell Journal of Economics, The RAND Corporation, vol. 13(2), pages 324-340, Autumn. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Horst Raff & Michael Ryan, 2006. "Firm-Specific Characteristics and the Timing of Foreign Direct Investment Projects," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  2. Constantinescu, Madalina, 2008. "Knowledge Management through the Lens of Innovation and Labour Productivity in a Knowledge Based Economy," MPRA Paper 8930, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  3. Werner Hölzl, 2005. "The evolutionary theory of the firm: Routines, complexity and change," Working Papers geewp46, Vienna University of Economics and B.A. Research Group: Growth and Employment in Europe: Sustainability and Competitiveness. [Downloadable!]
  4. Alla Lileeva & Johannes Van Biesebroeck, 2008. "Outsourcing when Investments are Specific and Complementary," NBER Working Papers 14477, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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