The Economic Nature of the Firm: A Reader

doi:10.1017/CBO9780511817410

This book brings together classic writings on the economic nature and organization of firms, including works by Ronald Coase, Oliver Williamson, and Michael Jensen and William Meckling, as well as more recent contributions by Paul Milgrom, Bengt Holmstrom, John Roberts, Oliver Hart, Luigi Zingales, and others. Part I explores the general theme of the firm's nature and place in the market economy; Part II addresses the question of which transactions are integrated under a firm's roof and what limits the growth of firms; Part III examines employer-employee relations and the motivation of labor; and Part IV studies the firm's organization from the standpoint of financing and the relationship between owners and managers. The volume also includes a consolidated bibliography of sources cited by these authors and an introductory essay by the editors that surveys the new institutional economics of the firm and issues raised in the anthology.

'Over the years, this classic reader has been a terrific source for those seeking to understand the nature of the firm. The updated material in the new edition will extend this distinguished record.'

Bengt Holmstrom - MIT

'For decades, economists focused on the miracle of the market to explain the productive performance of advanced economies. But both the miracles and the problems of modern economies are mostly rooted inside the firms that the system cultivates. The previous editions of the Kroszner-Putterman reader served my students well by exposing them to the deepest economic thinking about the role of the firm. This new edition has some great additions that keep this reader right up to date.'

Paul Milgrom - Stanford University

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Contents

Frontmatter
pp i-iv
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Contents
pp v-viii
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Editors' preface
pp ix-x
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Reintroducing The Economic Nature of the Firm
pp 1-32
- By Randall S. Kroszner, University of Chicagos Booth School of Business, Louis Putterman, Brown University, Rhode Island
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Part I - Within and among firms: the division of labor
pp 33-34
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1 - From The Wealth of Nations
pp 35-45
- By Adam Smith
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2 - From Capital
pp 46-51
- By Karl Marx
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3 - From Risk, Uncertainty, and Profit
pp 52-57
- By Frank Knight
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4 - From The Modern Corporation and Private Property
pp 58-62
- By Adolf A. Berle, Jr., Gardiner C. Means
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5 - The use of knowledge in society
pp 63-68
- By Friedrich Hayek
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6 - Corporate governance
pp 69-76
- By Luigi Zingales, University of Chicago
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Part II - The scope of the firm
pp 77-78
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7 - The nature of the firm
pp 79-95
- By Ronald Coase, London School of Economics
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8 - Vertical integration, appropriable rents, and the competitive contracting process
pp 96-115
- By Benjamin Klein, University of California at Los Angeles, Robert Crawford, Brigham Young University, Armen Alchian, University of California, Los Angeles
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9 - The governance of contractual relations
pp 116-126
- By Oliver Williamson, University of California, Berkeley
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10 - The limits of firms: incentive and bureaucratic features
pp 127-142
- By Oliver Williamson, University of California, Berkeley
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11 - Bargaining costs, influence costs, and the organization of economic activity
pp 143-155
- By Paul Milgrom, Stanford University, John Roberts, Stanford University
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12 - The boundaries of the firm revisited
pp 156-170
- By Bengt Holmstrom, M.I.T., John Roberts, Stanford University
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Part III - The employment relation, the human factor, and internal organization
pp 171-172
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13 - Production, information costs, and economic organization
pp 173-196
- By Armen Alchian, University of California, Los Angeles, Harold Demsetz, University of California, Los Angeles
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14 - Contested exchange: new microfoundations for the political economy of capitalism
pp 197-211
- By Samuel Bowles, University of Massachusetts at Amherst, Herbert Gintis, University of Massachusetts at Amherst
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15 - Understanding the employment relation: the analysis of idiosyncratic exchange
pp 212-231
- By Oliver Williamson, University of California, Berkeley, Michael Wachter, University of Pennsylvania, Jeffrey Harris, M.I.T
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16 - Multitask principal–agent analyses: incentive contracts, asset ownership, and job design
pp 232-244
- By Bengt Holmstrom, M.I.T, Paul Milgrom, Stanford University
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17 - Work motivation
pp 245-252
- By Truman Bewley, Yale University
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18 - Worker participation
pp 253-264
- By John Pencavel, Stanford University
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Part IV - Finance and the control of the firm
pp 265-266
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19 - Mergers and the market for corporate control
pp 267-269
- By Henry Manne, George Mason University
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20 - Agency problems and the theory of the firm
pp 270-282
- By Eugene Fama, University of Chicago
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21 - Theory of the firm: managerial behavior, agency costs, and ownership structure
pp 283-303
- By Michael Jensen, Harvard University, William Meckling, University of Rochester
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22 - Organizational forms and investment decisions
pp 304-312
- By Eugene Fama, University of Chicago, Michael Jensen, Harvard University
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A Reader

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