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The Rise and Fall of the Size of Firms

Author

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  • Fabrizio Trau

Abstract

This paper tries to cast a theoretical bridge between two important phenomena which have characterised the evolution of advanced capitalist countries over the second half of this century: namely, the shift from the so-called golden age to the "unstable" macroeconomic environment of the '70s and the '80s, and the reversal of the long run pattern of development of the size distribution of industrial firms, firstly oriented towards a growing relevance of big business, and then turning into what has been called "the re-emergence of small scale production". Both phenomena seem to have had their turning point around the mid-seventies. The aim of the paper is to find in economic theory the possible explanations of why they coincide, why in the face of those macroeconomic changes, business firms gave that answer to the organisaiton of productive activity.

Suggested Citation

  • Fabrizio Trau, 2000. "The Rise and Fall of the Size of Firms," Working Papers wp156, Centre for Business Research, University of Cambridge.
    • Handle: RePEc:cbr:cbrwps:wp156
    Note: PRO-1
    as

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    References listed on IDEAS

    as
    1. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    2. Aghion, Philippe & Tirole, Jean, 1997. "Formal and Real Authority in Organizations," Journal of Political Economy, University of Chicago Press, vol. 105(1), pages 1-29, February.
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    More about this item

    Keywords

    golden age; uncertainty; competition; information; managerial constraint; firm size;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

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