IDEAS home Printed from https://ideas.repec.org/a/kap/jecgro/v5y2000i4p315-40.html
   My bibliography  Save this article

The Internal Organization of the Firm, Transaction Costs, and Macroeconomic Growth

Author

Listed:
  • Martimort, David
  • Verdier, Thierry

Abstract

This article analyzes the links between the internal organization of the firm and macroeconomic growth. We present a Schumpeterian growth model in which firms face agency costs due to the existence of asymmetries of information and the formation of vertical collusions inside those firms. To respond to the threat of collusion, optimal collusion-proof incentive contracts depend on the efficiency of collusive side contracting within organizations. Collusion affects therefore the firms' profitability, the incentives to innovate, and, finally, the stationary equilibrium growth rate of the economy. On the other hand, when the growth rate is small, the prospects of long-term relationships within firms increase the agents' incentives to invest in a better collusive technology. We then discuss the two-way relationships between the structure of internal transaction costs, organizational technologies, and macroeconomic growth. Copyright 2000 by Kluwer Academic Publishers

Suggested Citation

  • Martimort, David & Verdier, Thierry, 2000. "The Internal Organization of the Firm, Transaction Costs, and Macroeconomic Growth," Journal of Economic Growth, Springer, vol. 5(4), pages 315-340, December.
  • Handle: RePEc:kap:jecgro:v:5:y:2000:i:4:p:315-40
    as

    Download full text from publisher

    File URL: http://journals.kluweronline.com/issn/1381-4338/contents
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. David Martimort & Thierry Verdier, 2003. "From Inside The Firm to the Growth Process," Journal of the European Economic Association, MIT Press, vol. 1(2-3), pages 621-629, 04/05.

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jecgro:v:5:y:2000:i:4:p:315-40. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla) or (Rebekah McClure). General contact details of provider: http://www.springer.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.