A new approach to explaining the existence of firms and markets, focusing on variability and coordination. It stands in contrast to the emphasis on transaction costs, and on monitoring and incentive structures, which are prominent in most of the modern literature in this field. This approach, called the variability approach, allows us to: show why both the need for communication and the coordination costs increase when the division of labor increases; explain why, while the firm relies on direction, the market does not; rigorously formulate the optimum divisionalization problem; better understand the relationship between technology and organization; show why the `size' of the firm is limited; and to refine the analysis of whether the existence of a sharable input, or the presence of an external effect leads to the emergence of a firm. The book provides a wealth of insights for students and professionals in economics, business, law and organization.

Inhalt

Preface. Introduction. 1. The Division of Labor and Communication. 2. Variability and the Logic of Firms and Markets: Informal Analysis. 3. The Internal Organization of Complex Teams: Bounded Rationality and the Logic of Hierarchies. 4. Variability, Coordination, Information Structure, and the Logic of Firms and Markets. 5. Variability and the Logic of Firms, Markets, and Other Arrangements. 6. Adaptation Costs, Coordination Costs, and Optimal Firm Size. 7. Indivisibilities: Economies of Scale, Scope, and Speed. 8. The Variability Approach and the Multiproduct Firm. 9. Concluding Remarks. Bibliography. Names Index. Subject Index.