This book brings together classic writings on the economic nature and organisation of firms, including works by Ronald Coase, Armen Alchian and Harold Demsetz, Michael Jensen and William Meckling, and Oliver Williamson, as well as more recent contributions by Paul Milgrom and John Roberts, Bengt Holmstrom, and Oliver Hart. Part I explores the general theme of the firm's economic nature and its place in the market system; Part II covers the scope of the firm; Part III examines internal organisation and the human factor; and Part IV ties the firm's organisation and behaviour to issues of financing and ownership. It also includes a consolidated bibliography of sources cited by these authors, and a new introductory essay by the editors which surveys the new institutional economics of the firm and issues raised in the anthology. The collection aims to introduce this core literature to advanced undergraduates, business and economics graduate students, and to scholars in allied disciplines including law, sociology, and organisation and management.
• Fully revised, updated, and enlarged edition of successful first collection, with twelve new selections • Includes an excellent introductory essay which outlines why firms are important in economics, politics, and society generally • Combines classic papers, with key essays from recent literature – including Nobel prizewinner Ronald Coase
Preface; The economic nature of the firm: a new introduction Louis Putterman and Randall S. Kroszner; Part I. Within and Among Firms. The Division of Labor: 1. From The Wealth of Nations Adam Smith; 2. From Capital Karl Marx; 3. From Risk, Uncertainty, and Profit Frank Knight; 4. The use of knowledge in society Friedrich Hayek; 5. Relational exchange: economics and complex contracts Victor Goldberg; 6. From The Visible Hand Alfred Chandler; Part II. The Scope of the Firm: 7. The nature of the firm Ronald Coase; 8. Vertical integration, appropriable rents, and the competitive contracting process Benjamin Klein, Robert Crawford and Armen Alchian; 9. The governance of contractual relations Oliver Williamson; 10. The organization of industry G. B. Richardson; 11. The limits of firms: incentive and bureaucratic features Oliver Williamson; 12. Bargaining costs, influence costs, and the organization of economic activity Paul Milgrom and John Roberts; 13. Towards an economic theory of the multiproduct firm David Teece; Part III. The Employment Relation, The Human Factor, and Internal Organization: 14. Production, information costs, and economic organization Armen Alchian and Harold Demsetz; 15. Contested exchange: new microfoundations for the political economy of capitalism Samuel Bowles and Herbert Gintis; 16. Understanding the employment relation: the analysis of idiosyncratic exchange Oliver Williamson, Michael Wachter and Jeffrey Harris; 17. Multitask principal-agent analyses: incentive contracts, asset ownership, and job design Bengt Holmstrom and Paul Milgrom; 18. The prisoners' dilemma in the invisible hand: an analysis of intrafirm productivity Harvey Leibenstein; 19. Labor contracts as partial gift exchange George Akerlof; 20. Profit sharing and productivity Martin Weitzman and Douglas Kruse; Part IV. Finance and the Control of the Firm: 21. Mergers and the market for corporate control Henry Manne; 22. Agency problems and the theory of the firm Eugene Fama; 23. Theory of the firm: managerial behavior, agency costs, and ownership structure Michael Jensen and William Meckling; 24. Organizational forms and decision control Eugene Fama and Michael Jensen; 25. The structure of ownership and the theory of the firm Harold Demsetz; 26. An economist's perspective on the theory of the firm Oliver Hart; 27. Ownership and the nature of the firm Louis Putterman; References.