《1 产业组织理论-the theory of the firm》由会员分享，可在线阅读，更多相关《1 产业组织理论-the theory of the firm（16页珍藏版）》请在金锄头文库上搜索。
1、Lecture 1 : The Theory of the FirmLecture 1 The Theory of the FirmI. Two basic questionII. Three branches of theories Topic 1. Traditional theory: technological view Topic 2. Team production Topic 3. Incomplete contractI. Two basic question?Why do firms exist :What determines its size?II. Three bran
2、ches of views?Traditional theory: technological view?Team production: Free Rider problem?Incomplete Contract TheoryTopic 1. Traditional theory: technological view? Core idea: the minimum average cost determine its size, the most efficient sizeQuestion: Why should economies of scale be exploited with
3、in a firm?Why cant one merge two firms into one , while duplicate the market outcome (through selective intervention)Topic 2. Team production: Free Rider problem?Consider a monk hauls water by himself , and the volume of water depends on his effort e. Let the benefits and cost (measured in dollars)
4、be respectively denoted by e and .5*e2?Net benefit: (e)= e -0.5*e2?thus the monk will choose efficient level of effort e*=1,?Now for team cooperation.?Suppose that two monks decide to form a group, and their benefit is simply e1+ e2?The net benefit of one monk is .5*(e1+ e2)- 0.5*ei2 ,i=1,2?= ei=0.5
5、 1 Topic 2. Team production: Free Rider problem?Question 1: Why does the monk shirk? ?Each monk can only capture a fraction of the total benefit.?Question 2 : How to solve the shirking problem?Possible solution: Hire a monitor who tries to measure inputs and distributes output .Topic 2. Team product
6、ion: Free Rider problem?New problem: Who monitors the monitor? What should we do if they collude? Why should one listen to the monitor? Authority!?The main problem: it does offer an explanation for firm boundaries, contract execution is independent of institutional setting (firm or market).?But thin
7、gs change dramatically if contracts are incomplete.Topic 3. Incomplete Contract and the Theory of the Firm?Why is contract incomplete?1, indescribable, unforeseen contingencies 2, writing cost?3, unverifiable ?Two stories S. Grossman;?“The Clever King Solomon”Topic 3. Incomplete Contract and the The
8、ory of the Firm?Williamson(1975,1985):?Bring the transaction within a firm will offer safeguards against opportunistic behavior.Topic 3. Incomplete Contract and the Theory of the Firm?Grossman and Hartman(1986)?Organization ? ex post bargaining positions ? surplus division?Key result: The owner of t
9、he firm has stronger bargaining power, thus the optimal ownership depend on whose effort is relatively more important?Let do some formal stuff!Topic 3. Incomplete Contract and the Theory of the Firm?two agent 1,2 ; two input A ,B ,initially 1 owns A ,2 owns B?Three forms of organization:?(i) Vertica
10、l Separation: 1 owns A and 2 owns B .?(ii) 1-type Integration: 1 is the owner of the firm, i.e. 1 owns A and B .?(iii) 2-type Integration : 2 is the owner of the firm, i.e. 2 owns A and B .?The value of the output is v=e1+de2, cost 0.5*e12, 0.5*e22.Topic 3. Incomplete Contract and the Theory of the
11、Firm?(i)Vertical Separation?1 owns A and 2 owns B, the ex post is divided through bargaining, and each partys bargaining power is symmetric?The net benefit of 1 is v1=0.5*(e1+de2)-0.5*e12.?Thus 1s effort is e1=0.5;?The net benefit of 2 is v2=0.5*(e1+de2)-0.5*e22.?Thus 1s effort is e2=0.5d;?Total net
12、 benefit: VS= e1+de2-0.5*e12-0.5*e22 = 0.375(1+d2)Topic 3. Incomplete Contract and the Theory of the Firm?(ii)1-type Integration?1 owns A and B, by owns the two input , 1 has the rights to dispose the two input , thus has stronger bargaining power than 2?The net benefit of 1 is v1=(e1+de2)-0.5*e12.
13、?Thus 1s effort is e1= 1;?The net benefit of 2 is v2=0*(e1+de2)-0.5*e22.?Thus 1s effort is e2= 0;?Total net benefit: V1I = 0.5?(iii)2-type Integration?e1= 0, e2= d?V2I = 0.5*d2Topic 3. Incomplete Contract and the Theory of the Firm?Compare the net benefit?(i)Vertical Separation?VS= 0.375(1+d2)?(ii)1
14、-type Integration?V1I = 0.5?(iii)2-type Integration?V2I = 0.5*d2?Intuition: The owner of the important input should own the firm!Topic 3. Incomplete Contract and the Theory of the Firm?Long, long ago, there was a king. Solomon was his name. He was very clever. In his country, there were two women. T
15、hey lived in same house and each had a baby.?One night, one of the babies died. The dead mother took the other womans baby, and put it in her own bed. The next morning, they had a quarrel.?“No, this is my baby! The dead baby is yours!” Each one wanted the living baby. So they went to see King Solomon.?“Bring me a knife, cut the child into two and give each woman one half.” said the King.?“Oh, your Majesty! Give her my baby. Please dont kill my baby!”?Then King Solomon pointed to the woman in tears and said: “Give the baby to her. She is the mother.”
