Centralized Hierarchy within a Firm and Decentralized Hierarchy in the Market

Heling Shi and Xiaokai Yang

Chapter 6 in Increasing Returns and Economic Analysis, 1998, pp 145-169 from Palgrave Macmillan

Abstract: Abstract The purpose of this chapter is twofold. First, we develop a general equilibrium model based on corner solutions to simultaneously endogenize four aspects of the division of labour: individuals’ level of specialization, the length of the roundabout production chain, the number of goods in each link of the chain and the development of the institution of the firm. Second, the equilibrium model is used to endogenize the dividing line between the hierarchical structure of division of labour within the firm and the hierarchical structure of the network of transactions in the market.

Keywords: Transaction Cost; General Equilibrium; Producer Good; Intermediate Good; Good Market (search for similar items in EconPapers)
Date: 1998
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-26255-7_8

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DOI: 10.1007/978-1-349-26255-7_8

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