Production, Planning and Prices

George B. Richardson

No 98-27, DRUID Working Papers from DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies

Abstract: Firms do not exist because of the cost of using the price mechanism, but because they enable actions to be carried out concurrently in conformity with a particular design. This concurrent coordination, which production requires, is distinct from the evolutionary coordination, which is the unintended consequence of market transactions. The two processes are alternatives only to a limited extent. Evolutionary adjustment cannot bring about concurrent coordination, and irreducible uncertainty limits the scope of the planning which does.

Keywords: price mechanism; transaction costs coordination (search for similar items in EconPapers)
JEL-codes: D23 D51 (search for similar items in EconPapers)
Date: 1998
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Citations: View citations in EconPapers (1)

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