Ronald Coase's theory of the firm and the scope of economics

2014 ◽  
Vol 11 (2) ◽  
pp. 245-264 ◽  
Author(s):  
BRIAN J. LOASBY
Keyword(s):  
Economic Theory ◽  
Transaction Costs ◽  
Market Failure ◽  
Social Cost ◽  
Theory Of The Firm ◽  
Scarce Resource ◽  
Human Cognition ◽  
Competitive Industry ◽  
Theoretical Innovation ◽  
Use Of Knowledge

Abstract:Ronald Coase's work and its reception illustrate the significance – and the difficulty – of identifying problems and proposing solutions, which provides the theme of this paper. His theoretical innovation was not derived from economics, and seemed irrelevant to contemporary issues of economic theory and policy; only his much later perception of an apparently unrelated problem – the incoherent treatment of social cost as market failure – showed how the concept of transaction costs could illuminate two major areas of economics. The inadequate treatment by economists of the transaction costs of markets is linked to the neglect of processes, and especially the processes of organising the growth and use of knowledge – key concerns of Smith and Marshall. The curious relationship between Coase's explanation of firms and Austin Robinson's analysis of competitive industry leads to a reflection on the scarce resource of human cognition and the role (and fallibility) of institutions.

La struttura istituzionale della produzione *

1991 ◽  
Vol 9 (3) ◽  
pp. 163-173
Author(s):  
Ronald H. Coase
Keyword(s):  
Economic Theory ◽  
Transaction Costs ◽  
Market Economy ◽  
Government Regulation ◽  
Social Cost ◽  
Economic Planning ◽  
Invisible Hand ◽  
Eastern European ◽  
Eastern European Countries ◽  
Wealth Of Nations

Abstract During the two centuries following the publication of Adam Smith’s Wealth of Nations the economists’ main objective has been to improve his analysis and in particular his basic statement that government regulation and economic planning are not necessary for the functioning of an efficient economy, since the price system (the «invisible hand») can successfully coordinate the economy.However, the excessive attention to prices deviated research from other aspects of the economic system. Coase’s effort, through his articles on «The nature of the firm» (1937) and «The problem of social cost» (1960), was to introduce in the traditional economic theory some institutional elements. The contribution of the first article was essentially the introduction into economic analysis of transaction costs. In the second article it was shown that contracting in absence of transaction costs maximizes the wealth, quite apart from the assignment of property rights.The introduction of institutional elements can be very helpful for reforms in Eastern European countries, because market economy can only work through appropriate institutions.

The Economic Theory of the Firm: A Generalization

2012 ◽  
pp. 41-66 ◽  
Author(s):  
M. Storchevoy
Keyword(s):  
Economic Theory ◽  
General Theory ◽  
Contract Theory ◽  
Theory Of The Firm ◽  
Material Structure ◽  
Structural Factors ◽  
Boundaries Of The Firm ◽  
Opportunistic Behaviour ◽  
New Variant

The paper deals with development of a general theory of the firm. It discusses the demand for such a theory, reviews existing approaches to its generalization, and offers a new variant of general theory of the firm based on the contract theory. The theory is based on minimization of opportunistic behaviour determined by the material structure of production (a classification of ten structural factors is offered). This framework is applied to the analysis of three boundaries problems (boundaries of the job, boundaries of the unit, boundaries of the firm) and five integration dilemmas (vertical, horizontal, functional, related, and conglomerate).

Theory of the firm, Supply Chain management, and relationship marketing

2014 ◽  
pp. 40-60
Author(s):  
M. Storchevoy
Keyword(s):  
Economic Theory ◽  
Supply Chain ◽  
Supply Chain Management ◽  
Relationship Marketing ◽  
Theory Of The Firm ◽  
Chain Management

The paper studies through the lens of the economic theory of the firm the development of two managerial disciplines: supply chain management and relationship marketing. The author demonstrates which ideas have been borrowed by these disciplines from the economic theory of the firm, and in what extent their implications may be useful for the latter.

scholarly journals The Welfare Impact of Second-Best Uniform-Pigouvian Taxation: Evidence from Transportation

2018 ◽  
Vol 10 (4) ◽  
pp. 211-242 ◽  
Author(s):  
Christopher R. Knittel ◽  
Ryan Sandler
Keyword(s):  
Market Failure ◽  
Social Cost ◽  
Deadweight Loss ◽  
Negative Externalities ◽  
Market Outcomes ◽  
Welfare Impact ◽  
Second Best ◽  
Pigouvian Taxes ◽  
Gasoline Taxes ◽  
Optimal Taxes

When consumers or firms don’t face the true social cost of their actions, market outcomes are inefficient. In the case of negative externalities, Pigouvian taxes are one way to correct this market failure, but it may be infeasible to tax the externality directly. The alternative, taxing a related product, will be second-best. In this paper, we show that in the presence of heterogeneous externalities and elasticities, this type of indirect tax performs poorly. In our empirical application, gasoline taxes to address pollution externalities, less than a third of the deadweight loss of the externality is addressed by second-best optimal taxes. (JEL D62, H21, H23, H71, H76, Q53, R48)

scholarly journals Fictions and frictions: Promises, transaction costs and the innovation of network technologies

2019 ◽  
Vol 49 (2) ◽  
pp. 264-277 ◽  
Author(s):  
Udo Pesch ◽  
Georgy Ishmaev
Keyword(s):  
Economic Theory ◽  
Transaction Costs ◽  
Cyclical Pattern ◽  
Critical Scrutiny ◽  
Network Technologies

New network technologies are framed as eliminating ‘transaction costs’, a notion first developed in economic theory that now drives the design of market systems. However, the actual promise of the elimination of transaction costs seems unfeasible, because of a cyclical pattern in which network technologies that make that promise create processes of institutionalization that create new forms transaction costs. Nonetheless, the promises legitimize the exemption of innovations of network technologies from critical scrutiny.

Cultural Capital as a Factor of Uncertainty and Transaction Costs

2015 ◽  
Vol 2015 (5) ◽  
pp. 3-21
Author(s):  
Elena Nikishina
Keyword(s):  
Social Capital ◽  
Economic Theory ◽  
Cultural Capital ◽  
Transaction Costs ◽  
Institutional Design ◽  
Bilateral Trade ◽  
Competitive Advantages ◽  
Suggested Approach ◽  
Definition Of ◽  
Reduction Of Uncertainty

The paper deals with the concept of culture and cultural capital in the economic theory. The concept of culture is analyzed through the points of criticism of social capital by R.Solow. The paper suggests a refined definition of culture and cultural capital. Several ways of productive use of cultural capital are described. Among them: through reduction of uncertainty and transaction costs, through use of competitive advantages, based on culture and harmonization of formal and informal rules. The effect of cultural capital on bilateral trade through reduction in uncertainty and transaction costs is tested in the empirical part of the paper. A suggested approach to cultural capital, based on transaction costs theory can be useful for institutional design, and policy-advice, aiming at the increase in competitiveness of society and the efficiency of formal institutions.

Event-specific ambush marketing legislation for mega-sporting events: an economics perspective

2015 ◽  
Vol 16 (5) ◽  
pp. 20-35 ◽  
Author(s):  
Steve McKelvey ◽  
Neil Longley
Keyword(s):  
Economic Theory ◽  
Free Speech ◽  
Social Cost ◽  
Sporting Events ◽  
Trademark Law ◽  
Ambush Marketing ◽  
Areas Of Concern

The bid process for hosting mega global sporting events mandates the enactment of event-specific ambush marketing legislation that provides extraordinary trademark law protections for private sports organisations and their official sponsors. Such event-specific ambush marketing legislation, or ESAML, has come under increasing scrutiny by academics and practitioners who question, among other things, the need for such legislation. One of the major areas of concern has become the potential social cost of such legislation that includes restrictions on free speech and curbs on marketplace competition. We apply economic theory as a means to explain why governments have been so willing to enact such legislation.

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