Contracts, Ownership, and Industrial Organization: Past and Future

We review the formal literature in industrial organization (IO) that incorporates organizational models of the firm into the analysis of industry behavior. Although many insights have been generated, this "organizational industrial organization" is still in its early stages: a complete the...

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Bibliographic Details
Published in:Journal of law, economics, & organization economics, & organization, 2014-05, Vol.30 (suppl_1), p.i82-i117
Main Authors: Legros, Patrick, Newman, Andrew F.
Format: Article
Language:English
Subjects:
Business entities
Cash
Contracts
Economic competition
Economic models
Economic theory
Economists
Industrial economics
Industrial productivity
Liquidity
Market competition
Market prices
Organizational behavior
Organizational behaviour
Prices
Productivity
Studies
Supply
Vertical integration
Welfare economics
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Summary:We review the formal literature in industrial organization (IO) that incorporates organizational models of the firm into the analysis of industry behavior. Although many insights have been generated, this "organizational industrial organization" is still in its early stages: a complete theory of the relationship between organizational design and traditional IO variables such as price, quantity, or welfare has yet to be developed. We show how the insights emanating from the incomplete contract literature can be used to address these questions and others of interest to both IO and organization economists: endogenous heterogeneity; the role of liquidity and surplus division in organizational design; the relationship between product price, industry supply, and organizational choices; the response of industry supply to shocks in fundamentals.
ISSN:8756-6222
1465-7341
DOI:10.1093/jleo/ewu002