Abstract
More than forty years have passed since Coase's fundamental insight that transaction, coordination, and contracting costs must be considered explicitly in explaining the extent of vertical integration. Starting from the truism that profit-maximizing firms will undertake those activities that they find cheaper to administer internally than to purchase in the market, Coase forced economists to begin looking for previously neglected constraints on the trading process that might efficiently lead to an intrafirm rather than an interfirm transaction. This paper attempts to add to this literature by exploring one particular cost of using the market system – the possibility of postcontractual opportunistic behavior.
Keywords
Coase theoremEconomic rentVertical integrationTransaction costProfit (economics)Industrial organizationEconomicsDatabase transactionMicroeconomicsProcess (computing)BusinessCommerceComputer science
Affiliated Institutions
Related Publications
What Firms Do? Coordination, Identity, and Learning
Firms are organizations that represent social knowledge of coordination and learning. But why should their boundaries demarcate quantitative shifts in the knowledge and capabili...
The Theory of the Firm Revisited
Abstract From the birth of modern economics in 1776 to 1970, a span of almost 200 years, only two works seem to have been written about the theory of the firm that have altered ...
Strategic assets and organizational rent
Abstract We build on an emerging strategy literature that views the firm as a bundle of resources and capabilities, and examine conditions that contribute to the realization of ...
A Historical Comparison of Resource-Based Theory and Five Schools of Thought Within Industrial Organization Economics: Do We Have a New Theory of the Firm?
A resource-based approach to strategic management focuses on costly-to-copy attributes of the firm as sources of economic rents and, therefore, as the fundamental drivers of per...
Alliance Capitalism
Business practices in Japan inspire fierce and even acrimonious debate, especially when they are compared to American practices. This book attempts to explain the remarkable eco...
Publication Info
- Year
- 2009
- Type
- book-chapter
- Pages
- 96-115
- Citations
- 683
- Access
- Closed
External Links
Social Impact
Altmetric
PlumX Metrics
Social media, news, blog, policy document mentions
Citation Metrics
683
OpenAlex
Cite This
Benjamin Klein,
Robert Crawford,
Armen A. Alchian
(2009).
Vertical integration, appropriable rents, and the competitive contracting process.
Cambridge University Press eBooks
, 96-115.
https://doi.org/10.1017/cbo9780511817410.010
Identifiers
- DOI
- 10.1017/cbo9780511817410.010