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

Author

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  • Martimort, D.
  • Verdier, T.

Abstract

This paper proposes an analysis of the links between the internal organization of firms and macroeconomic growth. We present a Schumpeterian growth model in which firms face agency costs. These agency costs are due to the existence of asymmetries of information and the formation of internal vertical collusions. As a response to the opportunity of internal collusion optimal incentive contracts depend on the efficiency of collusive side contracting within organizations.

Suggested Citation

  • Martimort, D. & Verdier, T., 1999. "The Internal Organization of the Firm, Transaction Costs and Macroeconomic Growth," Papers 1999-08, Laval - Laboratoire Econometrie.
    • Handle: RePEc:fth:lavale:1999-08
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    Cited by:

    1. Magnus Henrekson & Dan Johansson & Johan Karlsson, 2024. "To Be or Not to Be: The Entrepreneur in Neo-Schumpeterian Growth Theory," Entrepreneurship Theory and Practice, , vol. 48(1), pages 104-140, January.
    2. Francois, P. & Lloyd-Ellis, H., 2003. "Co-movement, Capital and Contracts : 'Normal' Cycles Through Creative Destruction," Discussion Paper 2003-62, Tilburg University, Center for Economic Research.
    3. David Martimort & Thierry Verdier, 2004. "The Agency Cost of Internal Collusion and Schumpeterian Growth," Review of Economic Studies, Oxford University Press, vol. 71(4), pages 1119-1141.
    4. Hiller, Victor, 2018. "Self-control and the rise and fall of factory discipline," Journal of Development Economics, Elsevier, vol. 133(C), pages 187-200.
    5. Daron Acemoglu & Pol Antràs & Elhanan Helpman, 2007. "Contracts and Technology Adoption," American Economic Review, American Economic Association, vol. 97(3), pages 916-943, June.
    6. Ottaviano, Gianmarco, 2007. "Contract Enforcement, Comparative Advantage and Long-Run Growth," CEPR Discussion Papers 6419, C.E.P.R. Discussion Papers.
    7. 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

    Keywords

    ECONOMIC GROWTH ; COSTS ; BUSINESS ORGANIZATION ; CONTRACTS;
    All these keywords.

    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

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