Firms, agency, and evolution

Armin W. Schulz

Journal of Economic Methodology, 2016, vol. 23, issue 1, 57-76

Abstract: A recent (though controversial) trend in economics has been to appeal to evolutionary theory when addressing various open questions in the subject. I here further investigate one particular such appeal to evolutionary biology: the argument that, since markets select (in a standard biological sense) firms as coherent units, firms should be seen to be genuine economic agents. To assess this argument, I present a model of firm/office selection in a competitive market, and show that there are cases where markets can select for firms/offices as collective units -- and thus, as agents of their own -- but also that there are cases where they do not. In this way, I try to make the evolutionary argument for the agency-based view of the firm more precise.

Date: 2016
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DOI: 10.1080/1350178X.2015.1024882

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