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Market Frictions, Governance and Economic Rents: Taking Stock and Looking Ahead


  • Mahoney, Joseph T.

    (University of Illinois at Urbana-Champaign)

  • Qian, Lihong

    (University of Illinois at Urbana-Champaign)


This paper develops a more unified organizational economics theory within Strategy. We begin with perfectly competitive markets derived from the first fundamental welfare theorem of economics, and develop a parsimonious typology of market frictions. We show how two primary questions in Strategy--why firms exist and why some firms outperform others--can be evaluated from this market frictions logic. Building on this logic enables more systematic explanations and predictions concerning governance structures and economic rents in Strategy research.

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  • Mahoney, Joseph T. & Qian, Lihong, 2009. "Market Frictions, Governance and Economic Rents: Taking Stock and Looking Ahead," Working Papers 09-0104, University of Illinois at Urbana-Champaign, College of Business.
  • Handle: RePEc:ecl:illbus:09-0104

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