The Theory of the Firm Firms are a ubiquitous feature of the economic landscape, with much of the activity undertaken within an economy taking place within their boundaries Given the size of the contribution made by firms to economic activity, employment and growth, having a theoretical understanding of the nature and structure of firms is crucial for understanding how an economy functions The Theory of the Firm firstly offers a brief overview of the ‘past’ of the theory of the firm This consists of a concise discussion of the classical view of production, followed by an outline of the development of the neoclassical – or ‘textbook’ – approach to firm level production Secondly, the ‘present’ of the theory of the firm is discussed in three sections The first section considers the post-1970 theory of the firm literature per se, while the second section scrutinises the relationship between the three most prominent of the modern sets of theories: the reference point, property rights and transaction cost approaches The third section looks at the theory of privatisation The unique aspects of this book include its discussions of the post-1970 contributions to the theory of the firm; the integration of the theory of the entrepreneur with the theory of the firm; and the theory of privatisation This volume offers an intuitive introduction to the theories of the firm as well as simple formal models of the most important contributions to the literature It also outlines the historical evolution of the traditional and modern theories of the firm This book will be of great interest to those who study the history of economic thought, industrial economics and organisational studies Paul Walker is an economist in Christchurch, New Zealand He received his PhD in Economics from the University of Canterbury, Christchurch, New Zealand His research is mainly on the history of economics and the theory of the firm Routledge Studies in the History of Economics A full list of titles in this series is available at: www.routledge.com/series/SE0341 177 Economic Theory and its History Edited by Giuseppe Freni, Heinz D Kurz, Andrea Lavezzi, Rodolfo Signorino 178 Great Economic Thinkers from Antiquity to the Historical School Translations from the series Klassiker der Nationalökonomie Bertram Schefold 179 On the Foundations of Happiness in Economics Reinterpreting Tibor Scitovsky Mauizio Pugno 180 A Historical Political Economy of Capitalism After Metaphysics Andrea Micocci 181 Comparisons in Economic Thought Economic Interdependency Reconsidered Stavros A Drakopoulos 182 Four Central Theories of the Market Economy Conceptions, Evolution and Applications Farhad Rassekh 183 Ricardo and the History of Japanese Economic Thought A selection of Ricardo studies in Japan during the interwar period Edited by Susumu Takenaga 184 The Theory of the Firm An overview of the economic mainstream Paul Walker The Theory of the Firm An overview of the economic mainstream Paul Walker First published 2017 by Routledge Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 711 Third Avenue, New York, NY 10017 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2017 Paul Walker The right of Paul Walker to be identified as author of this work has been asserted by him in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988 All rights reserved No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data Names: Walker, Paul, 1959- author Title: The theory of the firm: an overview of the economic mainstream / Paul Walker Description: Abingdon, Oxon; New York, NY: Routledge, 2017 Identifiers: LCCN 2016014898| ISBN 9781138191532 (hardback) | ISBN 9781315640440 (ebook) Subjects: LCSH: Industrial organization (Economic theory) Classification: LCC HD2326 W354 2017 | DDC 338.6–dc23 LC record available at https://lccn.loc.gov/2016014898 ISBN: 978-1-138-19153-2 (hbk) ISBN: 978-1-315-64044-0 (ebk) Typeset in Times New Roman by Sunrise Setting Ltd, Brixham, UK Contents Preface and acknowledgements A note on the numbering of equations, theorems and figures Introduction vi ix The ‘past’ 10 The founding works 51 The ‘present’ 62 Partial versus general equilibrium 155 Conclusion 159 Appendix 1: the particular expenses curve Appendix 2: Simon (1951) Appendix 3: monotone comparative statics Appendix 4: examples of poor SOE performance References Index 162 165 172 175 178 205 Preface and acknowledgements The theoretical literature on the firm is diverse and growing, albeit from a small base, and no overview of the length presented here could possibly encompass all the different approaches that have been taken, across both time and the spectrum of economic thought, to the analysis of production and/or the firm We therefore restrict our survey to, in the main, the major ‘mainstream’ approaches to the firm, both ‘past’ and ‘present’ We concentrate on the mainstream theory because these theories, obviously, dominate the literature while aspects of the pre-1970 mainstream theory are still the most common, often the only, ‘theory of the firm’ taught to students Few of the post-1970 theoretical advancements have made it into the standard economics textbooks, particularly undergraduate textbooks While the intention here is to provide a concise, reasonably critical, yet readable survey that is primarily focussed on the contemporary advancements within the theoretical literature on the firm, we also wish to understand the evolution of ideas that has resulted in these theories Consequently, we consider, albeit briefly, the theoretical approaches of the pre-1970 literature (the ‘past’) as well as the approaches of the post-1970 period (the ‘present’) Consideration of the history of the theory of the firm allows us to see the changes that have taken place with regard to economists’ thinking on production or firms over the last 200 years or so Even for critics of the orthodoxy, an appreciation of the mainstream theory is needed to understand the reasons for and the advantages/disadvantages of the nonstandard approaches taken in the heterodox literature It has been assumed that the reader will have been exposed to the standard introductory/intermediate ‘textbook’ treatment of the firm and thus little time need be spent on a discussion of the details of this material If a review of this material is desired see, for example, in increasing order of difficulty, Varian (2014: Chapters 19 to 23), Cowell (2006: Chapters and 3), Gravelle and Rees (2004: Chapters to 10) and Mas-Colell et al (1995: Chapter 5) In terms of the mathematics required, we try to follow the advice of A W Zotoff: “In spite of the maxim, ‘Il ne s’agit pas de faire lire, mais de faire penser’, we think that mathematical problems should not be given to economists to solve, and that mathematical economics should be treated as simply as possible, with all Preface and acknowledgements vii results worked out in detail” (Zotoff 1923: 115) We thus attempt to provide as much detail as is needed for a senior undergraduate to follow any mathematical argument relatively easily An extensive bibliography is provided to guide readers who wish to further their reading on topics of interest and as a starting point for reading on material not covered directly in the text See, for example, Chapter note 3, page 6, for information on other surveys of the mainstream theory and the pertinent empirical evidence, in addition to coverage of some applications and extensions of the mainstream approaches to the firm For another example see Chapter note 6, page 7, for references that provide, along with their own bibliographies, a starting point for reading on the heterodox literature Acknowledgements We wish to thank (without implicating) Graeme Guthrie and Simon Kemp for their comments on, and for pointing out errors in, previous drafts of the manuscript All of the remaining errors are the fault of the author We are grateful to the following people and publishers for permission to incorporate material which has been published previously (all urls accessed 27 April 2016): Professor Vikramaditya S Khanna for permission to reproduce Table on page 27 of Vikramaditya S Khanna, ‘The Economic History of Organizational Entities in Ancient India’, University of Michigan Law School Program in Law & Economics Working Paper No 14, updated version 2/2006 Professor Timothy Van Zandt for permission to reproduce results from Timothy Van Zandt, ‘An Introduction to Monotone Comparative Statics’, Notes, INSEAD, 14 November 2002 Cambridge University Press for permission to reproduce Figure 10.7 on page 368 of Mark Blaug, Economic Theory in Retrospect, 5th edn., Cambridge: Cambridge University Press, 1997 www.cambridge.org/ Cambridge University Press for permission to reproduce Figure 1.1 Microeconomics with endogenous entrepreneurs, firms, markets and organizations, on page of Daniel Spulber, The Theory of the Firm: Microeconomics with Endogenous Entrepreneurs, Firms, Markets, and Organizations, Cambridge: Cambridge University Press, 2009 www.cambridge.org/ Oxford University Press for permission to reproduce the figure from page 44 of D H Macgregor, Economic Thought and Policy, Oxford: Oxford University Press, 1949 https://global.oup.com/academic/ The Econometric Society for permission to reproduce Figures and from Herbert A Simon, ‘A Formal Theory of the Employment Relationship’, Econometrica, 19(3) (July, 1951), 293–305 http://onlinelibrary.wiley.com/journal/ 10.1111/(ISSN)1468–0262 Wiley for permission to use material from Paul Walker, ‘The (Non) theory of the Knowledge Firm’, Scottish Journal of Political Economy, 57(1) (February, 2010), 1–32 http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467–9485 viii Preface and acknowledgements Wiley for permission to use material from Paul Walker, ‘The ‘Reference Point’ Approach to the Theory of the Firm: An Introduction’, Journal of Economic Surveys, 27(4) (September, 2013), 670–95 http://onlinelibrary.wiley.com/journal/ 10.1111/(ISSN)1467–6419 Wiley for permission to use material from Paul Walker, ‘Contracts, Entrepreneurs, Market Creation and Judgement: The Contemporary Mainstream Theory of the Firm in Perspective’, Journal of Economic Surveys, 29(2) (April, 2015), 317–38 http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1467–6419 Taylor and Francis for permission to use material from Paul Walker, ‘From Complete to Incomplete (Contracts): A Survey of the Mainstream Approach to the Theory of Privatisation’, New Zealand Economic Papers, 5(2) (June, 2016), 212–29 www.tandfonline.com/toc/rnzp20/current#.VdifrPaqpBd A note on the numbering of equations, theorems and figures The numbering system utilised in the book consists of two numbers x.y where the first number, x, is the page on which the equation, theorem, or figure and so on appears while the second number, y, is the number of the equation, theorem or figure on that page As an example, Figure 111.3 would be the third figure on page 111 198 References Peaucelle, Jean-Louis (2006) ‘Adam Smith’s Use of Multiple References for His Pin Making Example’, European Journal of the History of Economic Thought, 13(4) December: 489–512 Peaucelle, Jean-Louis and Cameron Guthrie (2011) ‘How Adam Smith Found Inspiration in French Texts on Pin Making in the Eighteenth Century’, History of Economic Ideas, 19(3): 41–67 Penrose, E T (1959) The Theory of the Growth of the Firm, New York: Wiley Pigou, A C (1922) ‘Empty Economic Boxes: A Reply’, Economic Journal, 32(128) December: 458–65 Pigou, A C (1928) ‘An Analysis of Supply’, Economic Journal, 38(150) June: 238–57 Pigou, A C (1937) Socialism versus Capitalism, London: The Macmillan Press Pirie, Madsen (1988) Privatization: Theory, Practice and Choice, Aldershot, UK: Wildwood House Pollard, Sidney (1968) The Genesis of Modern Management, London: Penguin Pollitt, Michael G (1999) ‘A Survey of the Liberalisation of Public Enterprises in the UK since 1979’, Department of Applied Economics, University of Cambridge, Working Papers Amalgamated Series: 9901 January, Cambridge Puu, T (1970) ‘Ferguson, C E.: “The Neoclassical Theory of Production and Distribution.” Some Comments on Part I’, Swedish Journal of Economics, 72(3) September: 230–40 Quéré, Michel (2006) ‘The Representative Firm’ In Tiziano Raffaelli, Giacomo Becattini and Marco Dardi (eds.), The Elgar Companion to Alfred Marshall (412–7), Cheltenham, UK: Edward Elgar Rabin, Matthew (1993) ‘Information and the Control of Productive Assets’, Journal of Law, Economics and Organization, 9(1) Spring: 51–76 Radner, Roy (1992) ‘Hierarchy: The Economics of Managing’, Journal of Economic Literature, 30(3) September: 1382–1415 Radygin, Alexander (2003) ‘Privatization, Ownership Redistribution, and Formation of the Institutional Basis for Economic Reforms’ In Yegor Gaidar (ed.), The Economics of Transition (395–459), Cambridge, MA: MIT Press Rajan, Raghuram G and Luigi Zingales (1998) ‘Power in a Theory of the Firm’, Quarterly Journal of Economics, 113(2) May: 387–432 Rajan, Raghuram G and Luigi Zingales (2001a) ‘The Firm as a Dedicated Hierarchy: A Theory of the Origins and Growth of Firms’, Quarterly Journal of Economics, 116(3) August: 805–51 Rajan, Raghuram G and Luigi Zingales (2001b) ‘The Influence of the Financial Revolution on the Nature of Firms’, American Economic Review, 91(2) May: 206–12 Rees, Ray (1974) ‘A Reconsideration of the Expense Preference Theory of the Firm’, Economica, 41(163) August: 295–307 Rees, Ray (1994) ‘Economic Aspects of Privatization in Britain’ In Vincent Wright (ed.), Privatization in Western Europe: Pressures, Problems and Paradoxes (44–56), London: Pinter Publishers Richardson, G B (1972) ‘The Organization of Industry’, Economic Journal, 82(327) September: 883–96 Ricketts, Martin (2002) The Economics of Business Enterprise: An Introduction to Economic Organisation and the Theory of the Firm, 3rd edn., Cheltenham, UK: Edward Elgar Ricketts, Martin (2015) ‘Ownership, Governance and the Coasian Firm’ In Cento Veljanovski (ed.), Forever Contemporary: The Economics of Ronald Coase (46–69), London: Institute of Economic Affairs References 199 Ridley, Matt (2010) The Rational Optimist: How Prosperity Evolves, New York: HarperCollins Publishers Rizvi, S Abu Turab (2006) ‘The Sonnenschein-Mantel-Debreu Results after Thirty Years’, History of Political Economy, 38(Suppl 1): 228–45 Robbins, Lionel (1928) ‘The Representative Firm’, Economic Journal, 38(151) September: 387–404 Robbins, Lionel (1935) An Essay on the Nature & Significance of Economic Science, 2nd edn., Revised and Extended, London: Macmillan and Co Limited Robbins, Lionel (1998) A History of Economic Thought: The LSE Lectures, Steven G Medema and Warren J Samuels (eds.), Princeton, NJ: Princeton University Press Roberts, John (2004) The Modern Firm: Organizational Design for Performance and Growth, Oxford: Oxford University Press Robinson, E A G (1931) The Structure of Competitive Industry, London: Nisbet & Co Robinson, Joan (1933) The Economics of Imperfect Competition, London: Macmillan and Co., Ltd Robinson, Joan (1969) The Economics of Imperfect Competition, 2nd edn., London: The Macmillan Press Ltd Robinson, Romney (1971) Edward H Chamberlin, New York: Columbia University Press Roe, Mark J (1994) Strong Managers, Weak Owners: The Political Roots of American Corporate Finance, Princeton, NJ: Princeton University Press Roemer, John E (1989) ‘Public Ownership and Private Property Externalities’ In Jon Elster and Karl Ove Moene (eds.), Alternatives to Capitalism (159–79), Cambridge: Cambridge University Press Roemer, John E (1994) Egalitarian Perspectives: Essays in Philosophical Economics, Cambridge: Cambridge University Press Rosenberg, Nathan and L E Birdzell, Jr (1986) How the West Grew Rich: The Economic Transformation of the Industrial World, New York: Basic Books Rothchild, K W (1947) ‘Price Theory and Oligopoly’, Economic Journal, 57(227) September: 299–320 Salanié, Bernard (2005) The Economics of Contracts: A Primer, 2nd edn., Cambridge, MA: The MIT Press Samuels, Warren J., Jeff E Biddle and John B Davis (eds.) (2003) A Companion to the History of Economic Thought, Oxford: Blackwell Publishing Ltd Samuelson, Paul A (1947) Foundations of Economic Analysis, Cambridge, MA: Harvard University Press Sandmo, Agnar (2011) Economics Evolving—A History of Economic Thought, Princeton, NJ: Princeton University Press Sappington, David E and Joseph E Stiglitz (1987) ‘Privatization, Information and Incentives’, Journal of Policy Analysis & Management, 6(4) Summer: 567–85 Sautet, Frederic E (2000) An Entrepreneurial Theory of the Firm, London and New York: Routledge Sawyer, Malcolm C (1979) Theories of the Firm, London: Weidenfeld and Nicolson Schmidt, Klaus (1996a) ‘Incomplete Contracts and Privatization’, European Economic Review, 40(3–5): 569–79 Schmidt, Klaus (1996b) ‘The Costs and Benefits of Privatization: An Incomplete Contracts Approach’, Journal of Law, Economics & Organization, 12(1): 1–24 Schmidt, Vivien A (1999) ‘Privatization in France: The Transformation of French Capitalism’, Environment and Planning C: Government and Policy, 17(4): 445–61 200 References Schultz, T W (1939) ‘Theory of the Firm and Farm Management Research’, Journal of Farm Economics, 21(3, Part 1) August: 570–86 Schumpeter, Joseph A (1950) Capitalism, Socialism and Democracy, Third Edition, New York: Harper Torchbooks Scitovsky, Tibor (1952) Welfare and Competition: The Economics of a Fully Employed Economy, London: George Allen & Unwin Shackle, G L S (1967) The Years of High Theory: Invention and Tradition in Economic Thought 1926–1939, Cambridge: Cambridge University Press Shafer, W and H Sonnenschein (1982) ‘Market Demand and Excess Demand Functions’ In K Arrow and M Intriligator (eds.), Handbook of Mathematical Economics (vol 2, 671–93), Amsterdam: North-Holland Shapiro, Carl and Robert D Willig (1990) ‘Economic Rationales for Privatization in Industrial and Developing Countries’ In Ezra N Suleiman and John Waterbury (eds.), The Political Economy of Public-Sector Reform and Privatization (55–87), Boulder, CO: Westview Press Sharkey, William W (1982) The Theory of Natural Monopoly, Cambridge: Cambridge University Press Shelanski, Howard A and Peter G Klein (1995) ‘Empirical Research in Transaction Cost Economics: A Review and Assessment’, Journal of Law, Economics & Organization, 11(2) October: 335–61 Sheshinski, Eytan and Luis F López-Calva (2003) ‘Privatization and Its Benefits: Theory and Evidence’, CESifo Economic Studies, 49(3): 429–59 Shirley, Mary M and Patrick Walsh (2000) ‘Public versus Private Ownership: The Current State of the Debate’, Policy Research Working Paper 2420, World Bank, Development Research Group, Washington DC, August Shleifer, Andrei (1998) ‘State versus Private Ownership’, Journal of Economic Perspectives, 12(4) Autumn: 133–50 Shleifer, Andrei and Robert W Vishny (1994) ‘Politicians and Firms’, Quarterly Journal of Economics, 109(4) November: 995–1025 Shleifer, Andrei and Robert W Vishny (1997) ‘A Survey of Corporate Governance’, Journal of Finance, 52(2) June: 737–83 Shoven, John B and John Whalley (1984) ‘Applied General-Equilibrium Models of Taxation and International Trade: An Introduction and Survey’, Journal of Economic Literature, 22(3) September: 1007–51 Silver, Morris (1984) Enterprise and the Scope of the Firm: The role of vertical integration, Oxford: Martin Robertson Silver, Morris (1995) Economic Structures of Antiquity, Westport Connecticut: Greenwood Press Simon, Herbert A (1951) ‘A Formal Theory of the Employment Relationship’, Econometrica, 9(3) July: 293–305 Simon, Herbert A (1955) ‘A Behavioral Model of Rational Choice’, Quarterly Journal of Economics, 69(1) February: 99–118 Simon, Herbert A (1962) ‘New Developments in the Theory of the Firm’, American Economic Review, 52(2) May: 1–15 Smith, Adam (1776) An Inquiry into the Nature and Causes of the Wealth of Nations, Vols I and II, R H Campbell and A S Skinner (general eds.), W B Todd (textual ed.), Indianapolis: Liberty Classics, 1981 Sobel, Robert (1999) The Pursuit of Wealth: The Incredible Story of Money Throughout the Ages, New York: McGraw-Hill References 201 Sobel, Russell S (2007) ‘Entrepreneurship’ In David Henderson (ed.), The Concise Encyclopedia of Economics, 2nd edn (154–7), Indianapolis, Ind.: Liberty Fund Solow, Robert (1971) ‘Some Implications of Alternative Criteria for the Firm’ In R Marris and A Wood, (eds.), The Corporate Economy: Growth, Competition, and Innovative Potential (318–42), London: Macmillan Sowell, Thomas (2006) On Classical Economics, New Haven, CT: Yale University Press Spulber, Daniel F (2008) ‘Discovering the Role of the Firm: The Separation Criterion and Corporate Law’, Northwestern Law & Economics Research Paper No 08–23, December Spulber, Daniel F (2009) The Theory of the Firm: Microeconomics with Endogenous Entrepreneurs, Firms, Markets, and Organizations, Cambridge: Cambridge University Press Sraffa, Piero (1925) ‘Sulle relazioni fra costo e quantità prodotta’, Annali di Economia, 2: 277–328 Sraffa, Piero (1926) ‘The Laws of Returns under Competitive Conditions’, Economic Journal, 36(144) December: 535–50 Sraffa, Piero (1998), ‘On the Relations Between Cost and Quantity Produced’ English translation by John Eatwell and Alessandro Roncaglia In L.L Pasinetti (ed.), Italian Economic Papers (vol 3, 323–63), Bologna: Il Mulino and Oxford: Oxford University Press Stigler, George J (1941) Production and Distribution Theories: The Formative Period, New York: The Macmillan Company Stigler, George J (1951) ‘The Division of Labor is Limited by the Extent of the Market’, Journal of Political Economy, 59(3) June: 185–93 Sue Wing, Ian (2004) ‘Computable General Equilibrium Models and Their Use in Economy-Wide Policy Analysis: Everything You Ever Wanted to Know (But Were Afraid to Ask)’, MIT Joint Program on the Science and Policy of Global Change, Technical Note No 6, September Suleiman, Ezra N (1990) ‘The Politics of Privatization in Britain and France’ In Ezra Suleiman and John Waterbury (eds.), The Political Economy of Public Sector Reform and Privatization (113–36), Boulder, CO: Westview Press Sun, Qian and Wilson H S Tong (2002) ‘Malaysia Privatization: A Comprehensive Study’, Financial Management, 31(4) Winter: 79–105 Svensk Tidskrift (SvT) (1918) ‘Statsmonopol’, vol 8: 520–3 Sweezy, Paul M (1939) ‘Demand Under Conditions of Oligopoly’, Journal of Political Economy, 47(4) August: 568–73 Tadelis, Steven and Oliver E Williamson (2013) ‘Transaction Cost Economics’ In Robert Gibbons and John Roberts (eds.), The Handbook of Organizational Economics (159–89), Princeton, NJ: Princeton University Press Tirole, Jean (1988) The Theory of Industrial Organization, Cambridge, MA: MIT Press Tirole, Jean (2001) ‘Corporate Governance’, Econometrica, 69(1) January: 1–35 Tirole, Jean (2006) The Theory of Corporate Finance, Princeton, NJ: Princeton University Press Todd, S C., trans (2000) Lysians (The Oratory of Classical Greece), Austin, TX: University of Texas Press Topkis, D M (1998) Supermodularity and Complementarity, Princeton, NJ: Princeton University Press Troesken, Werner (1997) ‘The Sources of Public Ownership: Historical Evidence from the Gas Industry’, Journal of Law, Economics & Organization, 13(1): 1–25 202 References Troesken, Werner and Rick Geddes (2003) ‘Municipalizing American Waterworks, 1897– 1915’, Journal of Law, Economics & Organization, 19(2): 373–400 Tudge, Colin (1998) Neanderthals, Bandits and Farmers: How Agriculture Really Began, New Haven, CT: Yale University Press Vannoni, Davide (2002) ‘Empirical Studies of Vertical Integration: The Transaction Cost Orthodoxy’, RISEC: International Review of Economics and Business, 49(1) March: 113–41 Van Zandt, Timothy (2002) ‘An Introduction to Monotone Comparative Statics’, Notes, INSEAD, 14 November Available from http://faculty.insead.edu/vanzandt/ teaching/CompStatics.pdf [accessed 27 April 2016] Varian, Hal R (2014) Intermediate Microeconomics: A Modern Approach, 9th edn., New York: W W Norton and Company Veenhof, K R (2010) ‘Ancient Assur: The City, its Traders, and its Commercial Network’, Journal of the Economic and Social History of the Orient, 53(1/2): 39–82 Veljanovski, Cento (1989) ‘Foreword’ In Cento Veljanovski (ed.), Privatisation and Competition: A Market Prospectus (vii–x), London: Institute of Economic Affairs Veljanovski, Cento (2015a) ‘The Economics of Ronald Coase’ In Cento Veljanovski (ed.), Forever Contemporary: The Economics of Ronald Coase (14–45), London: Institute of Economic Affairs Veljanovski, Cento (ed.) (2015b) Forever Contemporary: The Economics of Ronald Coase, London: Institute of Economic Affairs Vickers, John and George Yarrow (1988) Privatization: An Economic Analysis, Cambridge, MA: MIT Press Viner, Jacob (1932) ‘Cost Curves and Supply Curves’, Journal of Economics, 3(1): 23–46 Viner, Jacob (1937) Studies in the Theory of International Trade, New York: Harper and Brothers Publishers Vives, Xavier (1999) Oligopoly Pricing: Old Ideas and New Tools, Cambridge, MA: MIT Press Vogelsang, Ingo (1990) Public Enterprise in Monopolistic and Oligopolistic Industries, Chur, Switzerland: Harwood Academic Publishers Walker, Paul (2013) ‘The ‘Reference Point’ Approach to the Theory of the Firm: An Introduction’, Journal of Economic Surveys, 27(4) September: 670–95 Walsh, Aidan (2009) ‘A Mengerian Theory of the Origins of the Business Firm’, Studies in Emergent Order, 2: 54–75 Wang, Ning (2014) ‘A Life in Pursuit of “Good Economics”: Interview with Ronald Coase by Ning Wang’, Man and the Economy, 1(1) June: 99–120 Wei, Zuobao, Oscar Varela, Juliet D’Souza and M Kabir Hassan (2003) ‘The Financial and Operating Performance of China’s Newly Privatized Firms’, Financial Management, 32(2) Summer: 107–26 Wernerfelt, Birger (1984) ‘A Resource-based View of the Firm’, Strategic Management Journal, 5(2) April–June: 171–80 Wernerfelt, Birger (1997) ‘On the Nature and Scope of the Firm: An Adjustment Cost Theory’, Journal of Business, 70(4) October: 489–514 Wernerfelt, Birger (2015) ‘The Comparative Advantages of Firms, Markets and Contracts: a Unified Theory’, Economica, 82(326) April: 350–67 Whinston, Michael D (2003) ‘On the Transaction Cost Determinants of Vertical Integration’, Journal of Law, Economics, & Organization, 19(1) April: 1–23 White, Lawrence H (2012) The Clash of Economic Ideas: The Great Policy Debates and Experiments of the Last Hundred Years, Cambridge: Cambridge University Press References 203 Whittaker, Edmund (1940) A History of Economic Ideas, New York: Longmans, Green and Co Wicksteed, Philip H (1894) An Essay on the Co-ordination of the Laws of Distribution, 1932 edition, Reprint No 12, London: London School of Economics Wiggins, Steven N (1991) ‘The Economics of the Firm and Contracts: A Selective Survey’, Journal of Institutional and Theoretical Economics, 147(4) December: 603–61 Williams, Philip L (1978) The Emergence of the Theory of the Firm: From Adam Smith to Alfred Marshall, London: The Macmillan Press Williamson, Oliver E (1964) The Economics of Discretionary Behavior: Managerial Objectives in a Theory of the Firm, Englewoods Cliffs, N.J.: Prentice-Hall Williamson, Oliver E (1970) Corporate Control and Business Behavior, Englewoods Cliffs, N.J.: Prentice-Hall Williamson, Oliver E (1971) ‘The Vertical Integration of Production: Market Failure Considerations’, American Economic Review, 61(2) May: 112–23 Williamson, Oliver E (1973) ‘Markets and Hierarchies: Some Elementary Considerations’, American Economic Review, 63(2) May: 316–25 Williamson, Oliver E (1975) Markets and Hierarchies: Analysis and Antitrust Implications, New York: The Free Press Williamson, Oliver E (1977) ‘Firms and Markets’ In Sidney Weintraub (ed.), Modern Economic Thought (185–202), Philadelphia: University of Pennsylvania Press Williamson, Oliver E (1979) ‘Transaction-Cost Economics: The Governance of Contractual Relations’, Journal of Law and Economics, 22(2) October: 233–61 Williamson, Oliver E (1985) The Economic Institutions of Capitalism, New York: The Free Press Williamson, Oliver E (1993) ‘Introduction’ In Oliver E Williamson and Sidney G Winter (eds.), The Nature of the Firm: Origins, Evolution, and Development (3–17), New York, Oxford: Oxford University Press Williamson, Oliver E (1996a) The Mechanisms of Governance, Oxford: Oxford University Press Williamson, Oliver E (1996b) ‘Transaction Cost Economics and the Carnegie Connection’, Journal of Economic Behavior & Organization, 31(2) November: 149–55 Williamson, Oliver E (2000) ‘The New Institutional Economics: Taking Stock, Looking Ahead’, Journal of Economic Literature, 38(3) September: 595–613 Williamson, Oliver E (2007) ‘Transaction Cost Economics: An Introduction Economics’, Discussion Papers, No 2007–3, Kiel Institute for the World Economy Available from: www.economics-ejournal.org/economics/discussionpapers/2007-3 [accessed 27 April 2016] Witt, Ulrich (1999) ‘Do Entrepreneurs Need Firms? A Contribution to a Missing Chapter in Austrian Economics’, Review of Austrian Economics, 11(1–2): 99–109 Wolfe, J N (1954) ‘The Representative Firm’, Economic Journal, 64(254) June: 337–49 Wolman, Leo (1921) ‘The Theory of Production’, American Economic Review, 11(1) March: 37–56 Woodland, Alan (2011) ‘General Equilibrium Trade Theory’ In Daniel Bernhofen, Rod Falvey, David Greenaway and Udo Kreickemeier (eds.), Palgrave Handbook of International Trade (39–87), Houndmills, Basingstoke, Hampshire, U.K.: Palgrave Macmillan World Bank (1995) Bureaucrats in Business: The Economics and Politics of Government Ownership, New York: Oxford University Press Yarrow, George (1986) ‘Privatization in Theory and Practice’, Economic Policy, April: 324–77 204 References Yarrow, George (1989) ‘Does Ownership Matter?’ In Cento Veljanovski (ed.), Privatisation and Competition: A Market Prospectus (52–69), London: Institute of Economic Affairs Yarrow, George (1993) ‘Privatization in the UK’ In V V Ramanadham (ed.), Constraints and Impacts of Privatisation (64–80), London: Routledge Yeaple, Stephen and Warren Moskowitz (1995) ‘The Literature on Privatization’, Research Paper No 9514, Federal Reserve Bank of New York, New York, June Yergin, Daniel and Joseph Stanislaw (1998) The Commanding Heights: The Battle Between Government and the Market Place That Is Remaking the Modern World, New York: Simon and Schuster Yu, Tony Fu-Lai (1999) ‘Toward a Praxeological Theory of the Firm’, Review of Austrian Economics, 12(1): 25–41 Zame, William R (2007) ‘Incentives, Contracts, and Markets: A General Equilibrium Theory of Firms’, Econometrica, 75(5) September: 1453–500 Zenger, Todd R., Teppo Felin and Lyda Bigelow (2011) ‘Theories of the Firm—Market Boundary’, Academy of Management Annals, 5(1) June: 89–133 Zingales, Luigi (2000) ‘In Search of New Foundations’, Journal of Finance, 55(4) August: 1623–53 Zotoff, A W (1923) ‘Notes on the Mathematical Theory of Production’, Economic Journal, 33(129) March: 115–21 Zouboulakis, Michel S (2015) ‘Elements of a Theory of the Firm in Adam Smith and John Stuart Mill’ In George C Bitros and Nicholas C Kyriazis (eds.), Essays in Contemporary Economics: A Festschrift in Memory of A D Karayiannis (45–52), Heidelberg: Springer Cham Index Adams, H C 151 adverse selection 62, 121, 158 AER controversy 30 aggregate production 37, 159, 160 aggrievement 114–117 Aghion, P 6, 50, 90, 148 Aharoni, Y 149 Ahn, S.-Y 37, 38 Alchian, A 4, 6, 37, 49, 63, 64, 87, 146 Allais, M 131 Allen, D Allen, G C 42 Antràs, P 6, 27 Appleby, J 20, 42 Arena, L 7, 49 Argote, L 35 Arrow, K J 17, 18, 158 Arrow-Debreu model 62, 146, 157, 158 Aspe, P 177 asset separation 41 asset specificity 89, 90, 98, 149 Assur 10–12 Augier, M 49 Austrian School 20; scapital theory 120, 122; economics 19, 20, 40 authority view 76, 89, 122 Aylen, J 175 Babbage, C 40 Backhouse, R E 22, 43, 48, 157 Baker, D Baker, G 107 Baker, M H 152 Baran, P A Barba Navaretti G Barker, G 38 Barney, J Barone, E 17 Barry, P 153 Barzel, Y 52, 63 Baumol, W 33, 34, 149, 156 Beer, M 42 behavioural model 5, 10, 31–35, 49 Bemis, E W 151 Berle, A.A 33 Berry, A 39 Best, M H 42 Biddle, J E 42 Bigelow, L Birdzell, L 38 Bitran, E 150 Blankenburg, S 22 Blaug, M 17, 44, 162, 163 Bodenhorn, D 49 Böhringer, C 158 Bollard, A 153 Bolton, P 6, 108, 147, 148 Bonar, J 40, 42 Boon, M J 151 Border, K C 65, 66, 68, 72, 147 Borek, T C Borland, J Bortolotti, B 127, 153 Bös, D 132, 135, 153 Boudreaux, D J 52, 60 Boulding, K E 6, 7, 44, 45 bounded rationality 31, 49, 88, 109, 145, 149 Bowen, H R 1, 6, 40 Boycko, M 141, 142, 153 Bresson, A 12, 13 British Steel Corporation 175 Brittan, S 127 Brown, J D 153 Brynjolfsson, E 121 Buhai, S 147 Butler, E 20, 21 Bylund, P 2, 7, 19, 20, 40, 61, 149, 160 206 Index Cannan, E 6, 14–16, 18, 39 Cantillon, R capital 15, 21, 29, 44, 46, 58, 65, 74, 116, 121, 130, 133, 136, 160, 176; human 115, 116 Carlos, A M 41 Carlson, B 130, 151 Carlson, S Carson, K Cassel, K G 152 Cawston, G 41 CESifo, 153 Chamberlin, E H 4, 6, 25, 30, 42, 48 Chandler, A D Chapman, S D 41 Cheung, S N S 63 Cho, D.-S 37 38 Chong, A 153 Claessens, S 153 Clapham, J H 23 Clark, J B 17 classical economics 4, 10, 15–17, 19, 37, 40, 42, 48, 159, 160; macro-centred approach 15, 16, 19, 159, 161 Coad, A Coase, R H 2, 4, 5, 19, 20, 30, 35–37, 51–62, 64, 76, 77, 138, 145, 146, 154; Coaseian 4, 5, 15, 36, 56, 145 Colander, D combination 56 communication-hierarchy 76, 108, 122 Conner, K R consummate performance 113, 124 consumption 14, 26, 33, 35–38, 44, 45, 117, 119, 128, 134, 149 contractual incompleteness 57, 88, 90, 97, 98, 110, 111, 139, 157 control rights 98, 138, 141, 142, 148, 154; residual 26, 98, 99, 105, 134, 139, 148 Cooper, W W 49 Copp, S F 41 Cosgel, M M 53 Cowell, F vi Cowen, T 58 Crawford, R G Crédit Lyonnais 175 Creedy, J 158 Cyert, R M 6, 27, 28, 34, 49 D’Souza, J 153 Dano, S Davis, E 151 Davis, J B 42 De Jong, A 38 De Scitovsky, T 33 Debreu, G 28, 45, 157 Demsetz, H 4, 5, 7, 10, 20, 21, 26, 35–37, 51, 59, 63, 64, 87, 146, 154 Dequech, D Dewatripont, M 108, 147, 148 Dietrich, M distribution 1, 15, 16, 37–40, 132; redistribution 53, 59; risk 51–53; spatial 55; surplus 98, 100, 114 division of labour 16, 17, 19, 21, 40, 44, 53 Djankov, S 153 Domberger, S 153 double marginalisation 154 Dreze, J H 158 Drucker, P 49, 150 Dulbecco, P Dumez, H 153 Duncan, I 153 Düppe, T 157 Dutch East India Company 38 Earle, J S 153 Earley, J 49 Economist magazine 175 Edgeworth, F Y 39 Ekelund, R 38, 41, 42 Ekman, E V 49 Ely, R T 151, 152 employment 1, 2, 29, 56–59, 63, 64; contract 77, 78, 80–82, 84–86, 88; relation(ship) 76, 77, 147 entity shielding 41 entrepreneur 4, 5, 8, 33, 38, 48–53, 55, 56, 58, 60, 61, 77, 78, 88, 117–123, 149, 156, 161; entrepreneurless 156; origin of word equilibrium: general 5, 7, 17, 22, 45, 62, 145, 155–158; partial 5, 22, 23, 45, 155, 156, 158 equilibrium firm 22, 24, 25, 47, 48 Evensky, J 43 Fama, G 63 farming 38, 159 Fehr, E 125, 149 Felin, F Ferguson, C E firm level production 6, 10, 14, 15, 37, 160, 161 firm(s): ancient history 10, 13; oldest in the world 37; origin of word Fleckner, A 2, 17, 39–42 Index 207 Foss, K 60, 125, 149 Foss, Lando and Thomsen classification 62, 63, 109, 117, 120, 122, 123, 156 Foss, N J 3, 5–7, 13–15, 19, 24, 27, 28, 47, 49, 51, 57, 58, 60–63, 76, 98, 108, 109, 117, 120, 122, 123, 125, 146, 149, 156 Frattarelli, A Freeland, R 61 Friedman, M 151, 155 Frisch, R full cost controversy 29, 30, 49 fundamental transformation 90, 113, 124, 125, 148, 149 Furubotn, E G 6, 148 Galbraith, J K Gale, D 158 Garicano, L 108 Garrouste, P 6, 7, 58 Garvey, G Gattai, V Geddes, R 130 Gelbach, S 153 Gelderblom, O 38 Gibbons, R 3, 6, 49, 73–76, 89, 107, 123, 125, 146, 147 Gökgür, N 153 Gordon, R 49 governance mechanism 76, 87, 88, 122 Gravelle, H vi Greece 12, 13, 39 Greve, H R 35 Griffiths, P 41, 43 Grossman, S J 26, 60, 73, 90, 91, 98, 99, 123, 124, 148 Grossman-Hart-Moore 26, 73, 89, 90 Guesnerie, R 158 Gupta, S 153 Guthrie, C 40 Hachette, D 150 Hagendorf, K haggling costs 56 Haley, B F 49 Hall, R L 29 Halonen-Akatwijuka, M 146 Hanappi, G 19 Hansmann, H 6, 39, 41, 49 Harcourt, G 22 Harper, R 151 Hart, N 47 Hart, O D 2, 4–6, 14, 26, 27, 39, 56, 57, 60, 73, 90, 91, 98, 99, 113–117, 120, 123–126, 134, 139, 144, 146, 148–150 Haskel, J 153 Hassan, M K 153 Havrylyshyn, O 153 Hayek, F 151 Heckscher, E 42, 43, 151 Hedrick, C L 6, 27, 28 Heflebower, R B 30 Heldman, H 151 Hermalin, B E Hicks, J R 50 Hickson, C R Higgs, H 8, 43 Hill, C 42 Hindustan Fertiliser Corporation 175 Hitch, C J 29 Hodge, G A 153 Hodgson, G M 19 Holcombe, R G 52, 60 Holden, R 6, 50, 148 Holmström, B 4, 6, 64, 65, 73, 116, 117, 147, 149 Holt, R Hoppe, E I 125, 143 Horn, M J 149 Howe, G 151 Howell, D 150, 151 Hubbard, T N Humphrey, T M 39 Hunt, E 38 Hutchison, T W 20 incentive system 63, 73, 122 income rights 138, 142, 154 incomplete contract(s) 5, 53, 57, 59, 62, 76, 98, 107, 109–111, 113, 115, 122, 134, 139, 142, 145, 155, 156, 160; Maskin and Tirole critique 109–111, 145 integration 7, 53, 56, 60, 76, 82, 84, 85, 89–91, 98, 99, 115, 116, 126, 152; non-integration 89, 115, 124 Ioannides S Jackson, P M 132 Jacobides, M Jacobsen, L 7, 40 Jankovic, I Jensen, M C 4, 37, 58, 63, 159 Jeunemaitre, A 153 Jewkes, J 129–131, 151, 152 Johnson, W E 39 208 Index Jones, E 61 Jones, R W 158 Jones, S R H 41 Jonker, J 38 Joseph, K 151 Joskow, P L judgement 4, 5, 52, 53, 59, 120, 121 Jursa, M 10, 39 Kallay, B Kay, J A 127 Keane, A H 41 Kennedy, G 41, 43 Keynes, J M 151 Khachatrian, A Khanna, V S 10, 11 Kihlstrom, R E 158 Kikeri, S 153 Kikuchi, T King, S 153 Kirkpatrick, C 153 Klein, B Klein, K 61 Klein, P G 3, 5–7, 14, 15, 19, 45, 49, 58, 61, 109, 120, 123, 149, 156 Knight, F H 5, 8, 19, 20, 36, 37, 44, 51–53, 57, 59, 60; Knightian, 52, 60 Kogut, B Kokh, A 153 Kongo Gumi 37 Köthenbürger, M 153 Koutsoyiannis, A 49 Kraakman, R 39, 41 Krafft, K Kuran, T 39 La Porta, R 153 labour 15, 20, 28, 29, 45, 56, 58, 61, 77, 86, 91, 98, 138, 142, 147 Laffont, J.-J 140, 141, 158 Lafontaine, F 1, Lal, D 43 land 15, 21, 131 Lando, H 6, 13, 28, 62, 63, 76, 98, 108, 109, 117, 120, 122, 123, 146, 156 Langlois, R N 7, 45, 53, 61 Larsen, M 39 Lawson, C 149 Lawson, N 133, 150 Le Texier, T 19 Lee, F S 29, 34 Legros, P 148 Leibenstein, H 16, 33 Lester, R A 29 Lewin, P Lewis, W A 151 Liebhafsky, H H 42 Linder, S 7, 149 Loasby, B J 28 Lockett, A López-Calva, L F 153 López-de-Silanes, F 133, 153 Lowry, S T 40 Luders, R 150 Lueck, D Ma, H 153 MacGettigan, D 153 Macgregor, D H 22, 46, 61 Machlup, F 6, 29, 30, 33, 34, 45, 48 Maekawa, K 13 Magnusson, L G 42, 43 Mahoney, J T mainstream 2–7, 14, 15, 20, 30–32, 34, 35, 37, 42, 51, 62, 76, 117, 119, 122, 123, 131, 145, 155, 159–161 Malmgren, H B managerial model 5, 10, 31–35, 49 March, J G 6, 34, 49 Marchionatti R 44 marginalist 29–31, 48; controversy, 29, 30, 34 Margolis, J 49 market creation 117, 119 Markusen, J R 6, 158 Marris, R 33, 34, 49 Marschak, J 108 Marshall, A 19, 22–24, 40, 42, 47, 54, 151, 152, 155, 161–163; Marshallian, 23, 155; pre-Marshallian, 42 Martimort, D 153 Mas-Colell, A vi, 50 Maskin, E 109–112, 145, 148 Maskus, K E 158 Maude, F 176 McAfee, R P 147 McDonald, H 175 McDonald, J 149 McManus, J C 52, 147 McMillan, J 1, 147 McNulty, P 16, 44 Mead, M 153 Meade, J E 131, 151 Means, G C 33, 49 Meckling, W H 4, 37, 58, 63, 159 Megginson, W L 128, 150, 153 Index 209 Menard, C Michel, C 10 Micklethwait, J 2, 12, 38 Milgrom, P 6, 73, 172 Mill, J S 8, 17, 39, 40, 151, 152 Millward, R 129 Mokyr, J 40, 41 Mongin, P 29, 30, 34, 48 Moore, J H 5, 6, 26, 60, 73, 90, 91, 98, 113–115, 123–125, 148 moral hazard 52, 53, 59, 62–64, 89, 121, 122, 139, 147, 158 Moskowitz, W 153 Moss, S 22–25, 42, 47 Müller, A Murphy, K J 107 Murray, J 38 Nash bargaining solution 102, 103 Natale, P nationalisation 126, 128–135, 142, 151, 152, 176; denationalisation 126, 133, 151, 176; neo-Marxist reasoning 130; renationalisation 176 Nellis, J 153 Nelson, R R neoclassical economics 4–6, 10, 14–17, 19–22, 26–37, 39, 42, 44, 45, 48, 50, 52, 62, 109, 145, 146, 156, 159–161 Netter, J M 128, 153 neutrality result(s) 136, 138, 141 Newbery, D M G 133 NEXUS OF CONTRACTS 63 nexus of contracts 61, 63, 122 Nicholas, S 41 Nishimura, K Nott, J 151 O’Brien, D P 15, 16, 40, 42 O’Shea, R P Ofek, H 38 Ogilvie, S 41 Ogus, A I 149 Olson, M 151 opportunism 88–90, 149; political 150 opportunity cost 79, 92, 114, 115 Otteson, J R 1, 43 Outerbridge, W S 151 Owen, R 152 ownership 6, 17, 29, 38, 41, 57, 76, 91, 98, 100, 102, 105, 115, 116, 119, 121, 126, 128, 131, 134, 136, 139–145, 150, 160; government 131, 132; public 129, 130, 134–136, 140, 141, 143, 144, 150; Marxist approach 149; state 128, 129, 131, 136, 140, 141, 143, 151 ownership and control 31–33, 133 ownership unit 76, 89, 98, 110, 122 Papandreou, A G Parker, D 58, 133, 153 particular expenses curve 46, 162 Peaucelle, J.-L 40 Penrose, E perfunctory performance 113, 124 Peters, W 153 Phelan, S E Piggott, J 153 Pigou, A C 4, 18, 22–25, 47, 48, 131, 151 Pirie, M 127 Pitchford, R 153 Pollard, S 40 Pollitt, M G 153 Prahalad, C K Price, C M 132 price theory 2, 4, 8, 30, 34, 45, 60, 159 principal–agent 5, 17, 33, 62, 73, 122, 134, 145, 146, 156 privatisation 3, 5, 62, 76, 126–128, 132–134, 136, 138–143, 145, 146, 150, 151, 153, 154, 160; definition 132; early use in U.K 150; empirical studies 153; Nigel Lawson on 133, 150; origin of word 150; reprivatisation 150 probability: density function 80–83; distribution 80, 81, 83–86, 114, 137 production 2, 4, 10, 14–18, 23, 24, 26, 31, 35, 36, 38, 39, 41, 42, 45, 46, 48, 50, 52, 54, 55, 64, 73, 74, 76, 90–93, 98, 103, 108, 110, 116, 119, 121, 122, 128, 129, 131, 132, 134, 140, 147, 149, 151, 152, 156, 163; factors of 16, 32, 45, 55, 59, 61, 77, 122; neglect of production function 15, 18, 25–27, 39, 45, 47, 48, 109, 147, 149, 156, 159 production possibilities set 45, 156, 159 property rights 5, 6, 57, 62, 73, 98, 99, 121, 123, 124, 128, 145, 149; old 125, 160 public enterprises: Boiteux tradition 153 Puu, T 48 Quéré, M 47 Rabin, M 121 Radner, R 108 Radygin, A 153 Rajan, R G 106, 107 210 Index Rees, R vi, 33, 153 reference point 5, 62, 76, 109, 113, 115–117, 122–125, 148, 149, 156 relational contract(s) 107–109 representative firm 22, 46, 47 Richardson, G B 7, 49 Richter, R 6, 148 Ricketts, M 146, 154 Ridley, M 38 risk 8, 9, 51, 52, 57, 73, 99, 119; adverse 73; neutral 74, 100, 134 Rizvi, S A T 158 Robbins, L 4, 16, 18, 19, 40, 47 Robbinsian maximiser 58 Roberts, J 3, 6, 63, 146, 147, 149 Robinson, E A G 7, 40, 61 Robinson, J 4, 6, 25, 30, 42, 47, 48 Robinson, R 23, 24, 48 Roe, M 160 Roemer, J 149 Roman Catholic Church 38 Roman Empire 43 Roman Republic 12 Rome 12, 39 Rosenberg, N 38 Rosser, J B Rothchild, K W Rutherford, T 158 Sáez, R E 150 Salanié, B 156, 157 sales contract 78, 80–82, 84, 85 Samuels, W J 42 Samuelson, P A Sappington, D E 134 Saussier, S 6, 58 Sautet, F E Sawyer, M C Say, J.-B Scharfstein, D S Schiller, C 153 Schmidt, K 139, 154 Schmidt, V 153 Schmitz, P W 125, 143 Schmoller, G von 19 Schultz, T W Schumpeter, J A 19, 130, 131 Scitovsky, T 129 Second Punic War 13 Second World War 128–130 selective intervention 93, 148 Shackle, G L S 47, 48 shading 113, 115–117, 123 Shafer, W 158 Shannon, C 172 Shapiro, C 135, 141 Shelanski, H A Sheshinski, E 153 Shirley, M M 153, 176 Shleifer, A 6, 131, 133, 138, 141, 142, 144, 151, 153 Shoven, J B 158 Silver, M 7, 12, 13 Simon, H A 6, 16, 31, 35, 64, 76–82, 84–87, 148, 165 Sin, H.-W 153 Siniscalco, D 127, 153 Slade, M 1, Smith, A 15–17, 19, 21, 39–44, 128; Smithian 53 Snooks, G D 149 Sobel, R 12 Sobel, R S societates 13 Solow, R 33 Sonnenschein, H 158 Sonnenschein-Mantel-Debreu theorems 157 Spulber, D F 5, 38, 42, 50, 109, 117–120, 122, 123, 149, 156 Squire, R 39, 41 Sraffa, P 23, 24, 47 Sreni 10 Stachurski, J Stanislaw, J 150 state-owned enterprise(s) (SOE(s)) 132, 138–141, 145, 150, 154, 175–177 Stieglitz, N Stigler, G 6, 39, 42 Stiglitz, J E 134 Sue Wing, I 158 Suleiman, E 153 Sun, Q 153 Sweezy, P M 8, 48 Szymanski, S 153 Tadelis, S 90–94, 96, 149 Takamatsu group 37 tax farming 12 Taylor’s Theorem: Young’s Form 70 theory of the firm 2–6, 10, 14, 16, 17, 19, 20, 22, 26, 28–30, 32–37, 39, 40, 42, 44, 45, 48, 49, 51–53, 57, 59, 60, 62, 73, 74, 89, 90, 98, 107–109, 113, 117, 119, 120, 122, 123, 126, 145, 146, 149, 155, 156, 159–161; Austrian 4, 7, 20; business Index 211 history 4, 8; capabilities approach 7; conflict theory of 8; critics 7, 8; evolutionary economics 7; growth of firms 8; heterodox 4; heterodox overviews 7; integration with the theory of the entrepreneur 4, 5, 52, 117, 120, 149, 161; knowledge-based view 7; Malmgren, H B and 7; Marxist 4, 8; neglect of 2, 14, 16, 18, 19; resource-based theory 7; Robinson, E A G and 40; surveys Theory of Value 157 Thompson, D J 127 Thomsen, S 6, 13, 28, 62, 63, 76, 98, 108, 109, 117, 120, 122, 123, 146, 156 Tiongso, E 153 Tirole, J 6, 73, 99, 109–111, 140, 141, 145 Tollison, R D 38, 41, 42 Tong, W H S 153 Topkis, D M 172 transaction cost(s) 2, 5, 35–37, 53, 56–58, 60–62, 73, 76, 90, 97, 98, 108, 123, 124, 139, 145, 146, 149, 154 Troesken, W 130 Tudge, C 38 Turkiye Taskorumu Kurmu 176 Turner, J D uncertainty 31, 32, 51–53, 58, 59, 85, 87, 89, 113, 114, 119; Knightian 4, 8, 9, 52, 120–122 Van Zandt, T 172–174 Vannoni, D Varela, O 153 Varian, H vi Veenhof, K 12, 39 Veljanovski, C 127, 154 Vickers, J 129, 153, 176 Ville, S P 41 Viner, J 4, 42, 164 Vishny, R W 6, 133, 138, 141, 142, 144, 153 Vives, X 172 Vogelsang, I 149 Walker, P 148 Walras, L 17, 20, 22, 39, 44, 155; Walrasian 155 Walsh, A Walsh, P 153 Wang, N Wei, Z 153 Weisbrot, M Wernerfelt, B 7, 87, 88, 147 Whalley, J 153, 158 Whinston, M D 149 White, L H 151, 152 Whittaker, E 42 Wicksteed, P H 17, 39 Wiegard, W 158 Wiggins, S N Williams, P L 39, 42, 46 Williamson, O E 2, 4, 6, 16, 26, 33–35, 37, 49, 60, 61, 64, 73, 88–94, 96, 108, 123, 124, 148, 149 Willig, R D 135, 141 Winter, S G Withers, G 153 Witt, U 7, 40 Wolman, L Woodland, A 158 Wooldridge, A 2, 12, 38 World Bank, 176 Wright, M Yarrow, G 128, 129, 153, 176 Yeaple, S R 6, 153 Yergin, D 150 Yu, T Zame, W R 158 Zander, U Zehnder, C 125, 149 Zenger, T R Zingales, L 6, 106, 107, 148 Zotoff, A W vi Zouboulakis, M 40 ... of the firm; the integration of the theory of the entrepreneur with the theory of the firm; and the theory of privatisation This volume offers an intuitive introduction to the theories of the firm. .. future advances in the theory of the firm Specifically it is the last two of these theories that open pathways to the integration of the theory of the entrepreneur with the theory of the firm The second... noted that there has been a close relationship between advances in the general economic mainstream and the development of the theory of the firm, [ .] the evolution of the theory of the firm has