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Coase meets Tarski: New Insights from Coase's Theory of the Firm

Author

Listed:
  • Tomoo Kikuchi

    (Department of Economics, National University of Singapore)

  • Kazuo Nishimura

    (Institute of Economic Research, Kyoto University)

  • John Stachurski

    (Research School of Economics, The Australian National University)

Abstract

This paper formulates a model embedding the key ideas from Ronald Coase’s famous essay on the theory of the firm in a simple competitive equilibrium setting with anarbitrary number of firms. The model studies the structure of production when transaction costs and diminishing returns to management are treated as given. In addition to recovering Coase’s main insights as equilibrium conditions, the model yields many new predictions on prices, firm boundaries and division of the value chain.

Suggested Citation

  • Tomoo Kikuchi & Kazuo Nishimura & John Stachurski, 2012. "Coase meets Tarski: New Insights from Coase's Theory of the Firm," KIER Working Papers 828, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:828
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    File URL: http://www.kier.kyoto-u.ac.jp/DP/DP828.pdf
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    References listed on IDEAS

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    Cited by:

    1. Paul Walker, 2015. "Contracts, Entrepreneurs, Market Creation And Judgement: The Contemporary Mainstream Theory Of The Firm In Perspective," Journal of Economic Surveys, Wiley Blackwell, vol. 29(2), pages 317-338, April.
    2. Yuan Zi, 2014. "Trade Costs, Global Value Chains and Economic Development," CTEI Working Papers series 06-2014, Centre for Trade and Economic Integration, The Graduate Institute.
    3. Richard E. Baldwin & Simon J. Evenett, 2015. "Value Creation And Trade In 21st Century Manufacturing," Journal of Regional Science, Wiley Blackwell, vol. 55(1), pages 31-50, January.

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    More about this item

    Keywords

    Transaction costs; vertical integration; production chains;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production

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