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Production, Information Costs, and Economic Organization

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Thu Nov 15 10:46:02 2007
Production, Information Costs, andEconomic Organization
The mark of a capitalistic society is thatresources are owned and allocated by suchnongovernmental organizations as firms,
households, and markets. Resource owners
increase productivity through cooperativespecialization and this leads to the demandfor economic organizations which facilitate
cooperation. \$'hen a lumber millemploys a cabinetmaker, cooperation betweenspecialists is achieved within a firm,
and when a cabinetmaker purchases woodfrom a lumberman, the cooperation takesplace across markets (or between firms).
Two important problems face a theory ofeconomic organization-to explain theconditions that determine whether the
gains from spkcialization and cooperativeproduction can better be obtained withinan organization like the firm, or across
markets, and to explain the structure ofthe organization.
I t is common to see the firm characterizedby the power to settle issues byfiat, by authority, or by disciplinary actionsuperior to that available in the conventionalmarket. This is delusion. The firm
does not own all its inputs. I t has no
power of fiat, no authority, no disciplinary
action any different in the slightest degree
from ordinary market contracting between
any two people. I can "punish" you
only by withholding future business or by
seeking redress in the courts for any failure
to honor our exchange agreement. That is
exactly all that any employer can do. He
* Professors of economics at the Fniversit~ of California,
1.0s Xngeles .\ckno~\ledgment is made for financia1
aid from the F. I,ill> Endowment, Inc, grant to
cCL.4 for research in the behavioral effects of property
rights
can fire or sue, just as I can fire my grocerby stopping purchases from him or suehim for delivering faulty products. Whatthen is the content of the presumed powerto manage and assign workers to various
tasks? Exactly the same as one little consumer's
power to manage and assign hisgrocer to va本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。