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Competencies as Private Information: An Efficient Capital Asset Pricing Theory of the Firm

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  • C. Paul Hallwood

Abstract

Competencies-based theories of the firm are extended beyond current literature - focused only on flow-markets, to the context of the efficient pricing of competencies as capital-assets. It is shown that the combination of insider information and complementarity to the insider's production function - very likely under path-dependency - rules out the necessitiy of assuming tacit knowledge or transaction costs in external flow-markets. Path-dependency and transaction cost theories of the firm are synthesized to explain internalization, in which internalization depends on various combinations of private information, transaction costs and complementarities in the production function.

Suggested Citation

  • C. Paul Hallwood, 1997. "Competencies as Private Information: An Efficient Capital Asset Pricing Theory of the Firm," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 153(3), pages 532-532, September.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(199709)153:3_532:capiae_2.0.tx_2-3
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    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L80 - Industrial Organization - - Industry Studies: Services - - - General

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