Span of control, transaction costs, and the structure of production chains

Tomoo Kikuchi, Kazuo Nishimura, John Stachurski

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)

Abstract

This paper builds coordination costs, transaction costs, and other aspects of the theory of the firm into a production chain model with an infinite number of ex ante identical producers. The equilibrium determines prices, allocations of productive tasks across firms, firm sizes, and the number of active firms. These prices and allocations match several stylized facts on firm boundaries, vertical integration, and division of the value chain.

Original languageEnglish
Pages (from-to)729-760
Number of pages32
JournalTheoretical Economics
Volume13
Issue number2
DOIs
Publication statusPublished - 2018 May
Externally publishedYes

Keywords

  • Span of control
  • firm boundaries
  • fragmentation
  • production chains

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)

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