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Learning and Profitability in a Theory of the Firm


  • Paul Hallwood

    (University of Connecticut)


Teams combine tacit and separable knowledge so complicating the pricing of knowledge and mitigating against knowledge transfer between firms. The efficient markets hypothesis suggests that entities possessing insider information should be ablest at accurately pricing any given complementary set of knowledge. Thus, even though some knowledge in a given complementary set is separable from a team, the easily transferable pieces are still most likely to be used within the originating firm. The boundaries of a firm may therefore expand even when knowledge is not tacit and transaction costs in markets for ideas are otherwise low.

Suggested Citation

  • Paul Hallwood, 2009. "Learning and Profitability in a Theory of the Firm," Working papers 2009-21, University of Connecticut, Department of Economics.
  • Handle: RePEc:uct:uconnp:2009-21

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    References listed on IDEAS

    1. Eliasson, Gunnar, 1990. "The firm as a competent team," Journal of Economic Behavior & Organization, Elsevier, vol. 13(3), pages 275-298, June.
    2. Jed DeVaro & Fidan Ana Kurtulus, 2005. "What Types of Organizations Benefit from Team Production, and How Do They Benefit?," Labor and Demography 0508003, EconWPA.
    3. Arthurs, Jonathan D. & Busenitz, Lowell W., 2006. "Dynamic capabilities and venture performance: The effects of venture capitalists," Journal of Business Venturing, Elsevier, vol. 21(2), pages 195-215, March.
    4. Ghemawat, Pankaj & Ricart, Joan E., 1993. "Organizational tension between static and dynamic efficiency, The," IESE Research Papers D/255, IESE Business School.
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    More about this item


    asymmetric information; evolutionary theory of the firm; governance; holdup; insider information; path dependency; rent appropriation; tacit information; transaction costs.;

    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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