The Economic Nature of the Firm
A Reader

Brings together classic and more recent contributions on the nature and organization of firms.

Randall S. Kroszner (Edited by), Louis Putterman (Edited by)

9780521141772, Cambridge University Press

Paperback, published 21 September 2009

400 pages, 10 b/w illus. 3 tables
22.6 x 15 x 2.3 cm, 0.54 kg

'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

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.

Preface: reintroducing the economic nature of the firm
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. From The Modern Corporation and Private Property A. A. Berle and G. C. Means
5. The use of knowledge in society Friedrich Hayek
6. Corporate governance Luigi Zingales
Part II. The Nature 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 limits of firms: incentive and bureaucratic features Oliver Williamson
11. Bargaining costs, influence costs, and the organization of economic activity Paul Milgrom and John Roberts
12. The boundaries of the firm revisited Bengt Holmstrom and John Roberts
Part III. The Employment Relation, the Human Factor and Internal Organization: 13. Production, information costs, and economic organization Armen Alchian and Harold Demsetz
14. Contested exchange
new microfoundations for the political economy of capitalism Samuel Bowles and Herbert Gintis
15. Understanding the employment relation: the analysis of idiosyncratic exchange Oliver Williamson, Michael Wachter and Jeffrey Harris
16. Multitask principal-agent analyses: incentive contracts, asset ownership, and job design Bengt Holstrom and Paul Milgrom
17. Work motivation Truman Bewley
18. From Worker Participation John Pencavel
Part IV. Finance and the Control of the Firm: 19. Mergers and the market for corporate control Henry Manne
20. Agency problems and the theory of the firm Eugene Fama
21. Theory of the firm: managerial behavior, agency costs, and ownership structure Michael Jensen and William Meckling
22. Organizational forms and investment decisions Eugene Fama and Michael Jensen
23. The rise in managerial stock ownership Clifford G. Holderness, Randall S. Kroszner and Dennis P. Sheehan
24. Executive compensation as an agency problem Lucian Arye Bebchuk and Jesse M. Fried
25. An economist's perspective on the theory of the firm Oliver Hart
26. Ownership and the nature of the firm Louis Putterman.

Subject Areas: International organisations & institutions [LBBU], Business & management [KJ], Economics [KC], Economics, finance, business & management [K]