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May 1, 2024 · The consulting firm McKinsey & Co. declared in a 2023 report that “Generative AI is poised to unleash the next wave of productivity,” adding value roughly the size of the U.K.’s economy to...
Entry and exit to and from the market are the driving forces behind a process that, in the long run, pushes the price down to minimum average total costs so that all firms are earning a zero profit. To understand how short-run profits for a perfectly competitive firm will evaporate in the long run, imagine the following situation.
Jun 13, 2018 · Dominant firms can crowd out new entrants and reduce entrepreneurship; at the same time, a lack of start-ups can reduce the entrants necessary to generate competition. Thus, we examine both ...
- Introduction
- Antecedents and The General Framework of Firm Economics
- Vertical Limits
- Internal Organization
- The Firm as A Mini-Economy Or Community of Persons
- The Firm as A Community of Persons
- Conclusion
- Bibliography
- Notes
The firm is a central institution in the functioning of any economic system in which people meet their needs through the division of labor, cooperative production, and the exchange of goods and services. As part of the system, firms serve to produce goods and services for sale on the marketplace, a necessary function allowing each person to combine...
In what are called market economics, the relations between firms, or between firms and their consumers, workers, investors, and so on, are regulated by prices that indicate the relative value of resources available in alternative uses when the needs that must be met outstrip available means. Market economics customarily include the institution of p...
The study of the vertical limits of firms is directly tied to Coase’s observations regarding the co-participation of markets and firm executives in the coordination of economic activity and the assignment of resources. The limits of a firm coincide with the authority with which a firm director is able to direct the assignment of resources, while th...
Economic research has separated the study of firm limits from the study of what occurs within a firm with given limits. To a high degree, the study of the inner workings of a firm has more-or-less explicitly concentrated on an analysis of the manner in which firm directors assign resources, as well as the directors own raison d’être. The internal o...
The economic theory of firms has unwittingly used the terms “firm” and “firm director” almost interchangeably. A careful reading of the works of Coase, and Alchian and Demsetz, reveals that they are really explaining the existence of a firm director who carries out concrete functions in the general framework of the specialization and division of wo...
Economic studies of firms are carried out under the premise of human behavior characterized as rationality: people know their preferences, and their behavior is coherent with them. Rationality allows academic research to simulate the private and social consequences of specific behavior and restrictions, recommending corrections or adjustments accor...
Academic knowledge about firms is imperative to an understanding of the functioning of the overall economy because what happens inside firms is as important, quantitatively and qualitatively, as what happens among those firms (Simon 1991). It is difficult to develop a theory of firms, even if only in one academic discipline, such as economics, beca...
Aighon, P. and J. TIROLE. “Formal and real authority in organizations.” Journal of Political Economy, 105, 1997, 1–29. Alchian, A. and H. Demsetz. “Production, information and economic organization.” American Economic Review, 62, 1972, 777–795. Alonso, R., W. Dessein, and N. Matouschek. “When does coordination require centralization?” American Econ...
DiMaggio (2001) and Roberts (2004) offer an integrated view of the recent past and future of firms from different disciplines—sociology and economics—that are, nevertheless, complementary. See also...Handler (1962, 1977) offers historical documentation of the growth of large firms in the US in the early twentieth century, and of the development of the professional manager. A view of the role of...The empirical referent of the theory on the limits of a firm is made up by the firm’s decisions to make, buy, or establish alliances with third parties. In recent years, terms such as outsourcing a...In reviewing this literature, we find that, rather than configuring a theory of firms, it defines a field of study: the economics of information. Many of the problems of transactions in conditions...In the short run, the perfectly competitive firm will seek the quantity of output where profits are highest or, if profits are not possible, where losses are lowest. In the long run, positive economic profits will attract competition as other firms enter the market.
If a firm’s technology exhibits economies of scale, costs per unit will fall as the firm expands its production. If a firm’s technology exhibits increasing returns to scale, tripling the inputs will more than triple the output level.
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Dec 21, 2022 · Building an entrepreneurial ecosystem through industrial policy is a complex process; It involves consideration of a range of factors, including the key ecosystem elements that spur entrepreneurship, the institutional factors that enable SME growth, and the role of public-private partnership.
