Talk:Theory of the firm/Archive 1

impossible to understand
Not only is this article replete with punctuation errors and grammatical errors, it is also impossible to understand. Its SMOG readability (http://www.harrymclaughlin.com/SMOG.htm) score is over 17, hardly a score suitable for a Wikipedia article. I can fix the punctuation and the grammar, but I can't make this article comprehensible. Could someone who knows something about this subject do some work on it? --Hattrick 05:16, 4 March 2007 (UTC)

I thought it read well enough. I actually wish I'd read a summary like this in my Micro class. A good supplementary reading to this is his Nobel acceptance lecture (in which he summarized his work and talked about what he thinks still needs to be done). I don't see on a quick reading if that is referenced, but if not it prob shd. —The preceding unsigned comment was added by Rxgx (talk • contribs). ndiim

"Probably the best constraint on such opportunism is reputation (rather than the law, because of the difficulty of negotiating, writing and enforcement of contracts). If a reputation for opportunism significantly damages an agent’s dealings in the future, this alters the incentives to be opportunistic." By starting off with the word "probably," it leaves me thinking it is either primary research, or else if the source uses that term, the source is claiming to be ignorant and is speculating. Either way, it should be fixed. (or removed, but I suspect is poorly paraphrased rather than made-up/original.) 2001:470:1F04:3DF:0:0:0:2 (talk) 17:50, 2 June 2013 (UTC)

Erdman reference
In the section marked "Transaction cost theory," I just commented out a reference to a 2006 publication by John Erdman. I don't have a problem with the reference, except that I don't know what it's referring to. After a quick Googling, I couldn't find a work fitting that description. If someone else can locate the paper, please evaluate its relevance and restore the citation. Thanks. --RunnerupNJ 11:27, 12 June 2007 (UTC)

I was very pleased to discover this article. However, I believe it could be improved by succinctly stating the key aspect of the theory that I had previously committed to memory, i.e., firms form when the costs of transactions becomes too high without them. That is a key point because new technologies, particularly the Web, has greatly reduced the cost of transactions. As those technologies mature, transaction costs will be reduced much further and the future of the "firm" as it now exists is very much in question. Indeed, to a very large degree, the interests of the firm are in conflict with the interests of individuals, not only consumers but employees as well. Two short papers I've written on this topic are available at http://mysite.verizon.net/ambur/Cult&Tech.htm & http://mysite.verizon.net/ambur/French&Raven.htm 71.191.90.4 (talk) 14:07, 24 August 2008 (UTC)Owen Ambur

UNMITIGATED DISASTER (aka poor writing)
Folks, this piece is a wreck! As the first comment notes, it's off the charts for readability...and that's not all. The use of technical terms (almost certainly unknown by the lay reader) probably lowers its readability by half again. The article might be okay for an academic wonk (see comment #2)--but for plain folks trying to get a grip on the basic concepts, this is worthless. (BTW, your current commenter has a Master's degree in administration, and spent a career as a technical writer and editor. I give this article a solid "F"...). —Preceding unsigned comment added by 192.254.1.7 (talk) 20:03, 18 October 2007 (UTC)

article name change
This is important stuff, but I'm pretty sure it's mis-named. In economics the theory of the firm generally refers to exactly "established economic theory, which usually views firms as given, and treats them as black boxes without any internal structure."

Some of this material belongs as extension of that concept, when it attempts to provide different models for fairly basic firm decisions. But a lot of this stuff is in a different category. I'm not yet sure what the label is for that category. "Organizational structure"? "Nature of the firm"? C RETOG 8(t/c) 03:50, 11 December 2008 (UTC)

What the page needs
... is something other than the neoclassical approach. This is what we call "new institutional economics", but it could do with something more on perhaps what the classical economists (to the extent that they said anything it was usually disparaging!), or the institutional economists. Is there anything more recent as well?  Wik idea  23:53, 26 December 2008 (UTC)


 * Hm, as I note above, I think what the page needs is to separate the name from the content, since the name doesn't match the content. I'm not sure--is your comment above addressed at the current content or what's usually called "theory of the firm"? C RETOG 8(t/c) 05:54, 27 December 2008 (UTC)

As I see it, this article needs to be deleted. Transaction Cost Economics is clearly a theorie of the firm, but it is far from beeing the only one and there is no reason to emphasize it. If you want to know more about Transaction Cost, then look it up under Transaction Costs. —Preceding unsigned comment added by 202.36.179.66 (talk) 01:01, 29 April 2009 (UTC)


 * The theory of the firm is not the same like transaction costs, also transaction costs plays an important role in the theory of the firm. If someone wants to know about the theory of the firm, he can read the background in this article. -- Grochim (talk) 16:57, 29 April 2009 (UTC)

My editing was immediately removed, although I explained why I edited the article. It is in major parts completely wrong and no academic in this field would agree to the content. In particular the overemphasise of transactions costs is not only problematic, but is conscious misguidance. —Preceding unsigned comment added by 202.36.179.66 (talk) 01:12, 29 April 2009 (UTC)

''This article only contains a small excerpt of theories of the firm. There are theories of the firm taht may be much more important than the ones mentioned below.'' -- 202.36.179.66


 * You tried to delete many sections in the article. If you see something wrong then try to improve it, not deleting it. You can also write a further section with a different point of view, but you should verify it by sources. It would be great if you could publish more important theories here. -- Grochim (talk) 16:57, 29 April 2009 (UTC)


 * Agree w Cretog8. Some excellent parts on particular authors, but the authors are important for the issues they treat, such as the hold-up problem, not b/c Williamson has written on it. The hold-up problem has been described as the "most influential work" in recent decades on why firms exist and what determines their boundaries (Holmström, Bengt,& John Roberts (1998). "The Boundaries of the Firm Revisited," Journal of Economic Perspectives, 12(4), pp. 74 (close Bookmarks). Yet it is mentioned only in passing in the Williamson section. Another good & relatively brief general survey of the literature is Archibald, G.C. (2008). "firm, theory of the," The New Palgrave Dictionary of Economics. Easier said than done.  Perhaps there is (or are) someone(s), both wp:bold and knowledgeable one who would not throw out the baby with the bath water & who could move in steps in a good direction in future months or years.  --Thomasmeeks (talk) 11:13, 19 September 2010 (UTC)

Proposal to merge into this article "Hold-up problem" in a month
Per end of previous section, the above proposal is at Talk:Hold-up problem where comments may be posted. --Thomasmeeks (talk) 16:18, 20 September 2010 (UTC)

Dr. Gaudeul's comment on this article
Dr. Gaudeul has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Very disjointed article, lots of unrelated bits and pieces out of different fields. In particular, the section on teamwork is only marginally relevant."

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Gaudeul has published scholarly research which seems to be relevant to this Wikipedia article:


 * Reference : Paolo Crosetto & Alexia Gaudeul & Gerhard Riener, 2012. "Partnerships, Imperfect Monitoring and Outside Options: Theory and Experimental Evidence," Jena Economic Research Papers 2012-052, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.

ExpertIdeasBot (talk) 16:10, 19 May 2016 (UTC)

Dr. Schmitt's comment on this article
Dr. Schmitt has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"A long article covering several approaches that could be shortened. I would eliminate for instance the text under `Background'."

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

Dr. Schmitt has published scholarly research which seems to be relevant to this Wikipedia article:


 * Reference : Raff, Horst & Schmitt, Nicolas, 2011. "Imports and the structure of retail markets," Economics Working Papers 2011,05, Christian-Albrechts-University of Kiel, Department of Economics.

ExpertIdeasBot (talk) 17:02, 19 May 2016 (UTC)

Dr. Coad's comment on this article
Dr. Coad has reviewed this Wikipedia page, and provided us with the following comments to improve its quality:

"Word missing, add "the" here (***):

According to Louis Putterman, most economists accept the(***) distinction between intra-firm and interfirm transaction but also that the two shade into each other; the extent of a firm is not simply defined by its capital stock.[10] George Barclay Richardson for example, notes that a rigid distinction fails because of the existence of intermediate forms between firm and market such as inter-firm co-operation.[11]

Drop "and etc..." at the end of this paragraph:

The weakness in Alchian and Demsetz’s argument, according to Williamson, is that their concept of team production has quite a narrow range of application, as it assumes outputs cannot be related to individual inputs. In practice this may have limited applicability (small work group activities, the largest perhaps a symphony orchestra), since most outputs within a firm (such as manufacturing and secretarial work) are separable, so that individual inputs can be rewarded on the basis of outputs. Hence team production cannot offer the explanation of why firms (in particular, large multi-plant and multi-product firms) exist.and etc...

Page numbers should be given alongside direct quotes.

Overall an interesting article that covers the main points."

We hope Wikipedians on this talk page can take advantage of these comments and improve the quality of the article accordingly.

We believe Dr. Coad has expertise on the topic of this article, since he has published relevant scholarly research:


 * Reference : Fabiana Moreno & Alex Coad, 2015. "High-Growth Firms: Stylized Facts and Conflicting Results," SPRU Working Paper Series 2015-05, SPRU - Science and Technology Policy Research, University of Sussex.

ExpertIdeasBot (talk) 19:47, 1 July 2016 (UTC)