human fallibility and economic organization doctrines concerning what is a good way to organize a society have influenced human societies more deeply than any other set of doctrines specifically beliefs that one way of organizing production and exchange is better than others have inspired a number of socioeconomic experiments leading to modern capitalist and socialist societies with far reaching implications yet surprisingly the central doctrines though a source of continuing ideological debate have been the subject of only limited scientific enquiry the major proposition the so called langelerner taylor theorem asserting the equivalence between competitive capitalist economies and decentralized socialist economies which make use of the price system made a point in stressing that the issue of the ownership of the means of production might not be central in the comparison of economic systems the theorem however was based on models both of capitalism and of market socialism in which the most important differences between the two systems were suppressed this paper describes a research program attempting to delineate some of the critical differences among alternative forms of economic organization we contend that central to an understanding of these differences is an understanding of differences in the organization of decision making of who gathers what information how it gets communicated and to whom and how decisions get made both concerning what actions to take and who should fill decision making positions this view should be contrasted with the traditional economic paradigm in which decision making plays no role the manager for instance simply looks up in a book of blueprints what the appropriate technique of production is for the given set of factor prices in the conventional paradigm moreover mistakes are never made either in gathering or transmitting information or in making decisions and indeed there are no costs associated with these activities by contrast the view we take here is that to err is human and that different organizational systems differ not only in what kinds of errors individuals make in them but also in how the systems aggregate errors as a result organizations differ systematically in the kinds of errors they make and thus in their overall economic performance organizations also differ in the costs associated with information collection with information communication and processing and with decision making indeed as we discuss below perfect decision making can be achieved by arranging enough decision makers in an appropriate manner no matter how fallible the decision makers are provided their decisions are not purely random or worse what prevents perfect decision making is the cost we refer to the specification of the structure of information gathering communication and decision making as an organization s architecture the objective of our research program has been to construct stylized models of an economic organization within which the consequences of alternative organizational architectures can be examined using these models not only can we compare the performance of particular organizational forms but we can also ask given a particular set of objectives and circumstances what is the optimal structure within tdiscussants david kreps stanford university paul milgrom yale university

any non welfarist method of policy assessment violates the pareto principle reply the public at large many policymakers and a number of economists hold views of social welfare that are non welfarist that is they attach some importance to factors other than the effects of policies on individuals utilities we show however that any non welfarist method of policy assessment violates the pareto principle

organizational efficiency and monopoly power the case of french industrial groups abstract in this paper we examine the respective roles of efficiency and of market power considerations in explaining why industrial groups are the predominant form of organization in specific industries our econometric analysis of french industrial groups suggests that administrative and organizational efficiency is an adequate explanation for the existence of these groups and that rivalry between groups differently integrated and diversified is more likely to be the case than collusion

fertility social mobility and long run inequality dynastic altruistic models with endogenous fertility have been shown to be unable to generate enough intergenerational persistence using a bewley model with endogenous fertility we show that it is possible to recover persistence key ingredients for our result include exponential child discounting discrete number of children diminishing costs of child rearing and an elasticity of intergenerational substitution larger than one our model provides a unified framework of analysis for long run inequality that incorporates fertility choices

revisiting the classical view of benefit based taxation this paper explores how the persistently popular classical logic of bene t based taxation in which an individual s bene t from public goods is tied to his or her income earning ability can be incorporated into modern optimal tax theory if lindahl s methods are applied to that view of bene ts rst best optimal policy can be characterized analytically as depending on a few potentially estimable statistics in particular the coe cient of complementarity between public goods and innate talent constrained optimal policy with a pareto e cient objective that strikes a balance controlled by a single parameter between this principle and the familiar utilitarian criterion can be simulated using conventional constraints and methods a wide range of optimal policy outcomes can result including those that match well several features of existing policies to the extent that such an objective re ects the mixed normative reasoning behind prevailing

fair demographic risk sharing in defined contribution pension systems in this article we formulate and solve the optimal design problem of a defined contribution public pension fund in a highly stylized but still rather general non stationary framework we adopt the viewpoint of a benevolent social planner who aims at treating in a fair manner the successive overlapping generations participating to such a long term mandatory system using the approach of el karoui and jeanblanc 1998 for the optimal consumption and portfolio choice problem with random income in a complete market we exhibit a solution to our intertemporal stochastic control problem where each generation receives a fair lumpsum retirement benefit it is proportional to the contributions she has paid during her active worklife and follows a fixed common rule although her pension value itself may depend on variables only observable at her retirement time we next relax the assumption that the collective pension system is mandatory and investigate the performance of individual investment plans in the market comparing the outcomes of both alternatives we derive a condition under which the collective fund can be expected to overperform the individual plan in the special case of a stationary economy such a possibility has been pointed out by gollier 2008 in fact this effect results from the possibility for the collective fund to borrow today against contributions of future generations which allows to implement riskier strategies and may improve its performance

the structure of production in south korea s manufacturing sector abstract this paper estimates a model of producer behavior for south korean manufacturing that simultaneously identifies substitution elasticities and scale economies a non homothetic translog function is employed which takes on various other functional forms i e cobb douglas homothetic homogeneous as special or limiting cases four significant conclusions are a there is potential scale economies in each subsector of south korean manufacturing b the substitutabilities between factor inputs are relatively low c factor demands are price elastic d the scale economies are correlated with the factor intensity

the architecture of economic systems hierarchies and polyarchies the authors present new ways of looking at economic organizations andsystems individuals judgments entail errors they sometimes reject good projects and accept bad projects the architecture of an economicsystem specifying how the decision making units are organized togetherwithin a system who gathers what information and who communicates what with whom affects its performance both because it influences thenature of errors that individuals make within the system and becauseit has a critical effect on the aggregation of individuals errors theperformance of two polar architectures decentralized polyarchical versus centralized hierarchical decision making authorities are analyzed and compared copyright 1986 by american economic association

presidential address antitrust restrictions on single firm strategies this article offers an overview of selected developments in the law and economics of antitrust regulation of single firm strategies the strategy generating the most cases historically is resale price maintenance here the law has moved sharply in both canada and the u s towards more solid economic foundations yet a gap between the law and economics remains the economics of resale price maintenance is reviewed within a framework that is much simpler and more general than the existing literature the law on a second strategy predatory pricing represents in my view a success story for the influence of economic theory in spite of the absence of a single accepted theory of predatory pricing the remaining single firm strategies are concerned largely with the exclusion by a dominant firm of rivals from a market i review with application to cases the two most basic questions concerning exclusionary strategies are exclusionary anticompetitive contracts ever entered into voluntarily by market participants on the other hand is complete or substantial foreclosure of a market through exclusionary strategies necessarily anticompetitive cette allocution presidentielle a l association canadienne d economique presente une vue d ensemble des developpements dans le droit et l economie de la reglementation antitrust sur les strategies d une firme unique la loi sur la strategie qui genere historiquement le plus de cas le maintien du prix de revente a change dramatiquement au canada et aux etats unis et derive vers une politique qui a des assises economiques solides mais il reste un ecart entre le droit et l economie on reexamine l economie du maintien du prix de revente a l aide d un cadre d analyse qui est a la fois plus simple et plus general que ce qui existe dans la litterature specialisee la loi pour ce qui est d une seconde strategie prix d eviction est a mon avis une grande reussite pour la science economique malgre l absence d une seule theorie du prix d eviction generalement acceptee un troisieme ensemble de strategies concerne l exclusion de ses rivaux d un marche par la firme dominante l auteur reexamine avec un recours extensif aux cas les deux questions de base pour ce qui est des strategies d exclusion est ce que les participants sur un marche entrent jamais volontairement dans un arrangement contractuel qui exclut et est anticoncurrentiel d autre part est ce que la saisie complete ou substantielle d un marche par des man uvres d exclusion est necessairement anticoncurrentielle

the convergence of economic systems and the m form abstract this paper draws together two areas of economic theory williamson s transactional analysis of the capitalist corporation and the role of technology in comparative economic systems it considers the m form as an organizational innovation under capitalism central planning and self management and comes to the conclusion that this new technology does not seem to have promoted the convergence of economic systems rather the m form s experience suggests that new technology has an impact consistent with ambivalence theory which sees new technologies as being adapted to suit the status quo

a comparative analysis of the use of information inputs in the manufacturing sectors of korea and japan abstract the paper examines the use of two information inputs information labor and purchased information services in korean and japanese manufacturing sectors in 1980 marginal products and substitution elasticities are calculated from translog production function estimates for the average manufacturing sector both inputs seem to be relatively more underused in korea second the elasticity estimates suggest several hypotheses about the growth of private bureaucracies in the two economies the results are unlikely to apply to other economies which have not yet attained an advanced industrial structure a simplistic stages theory of economic development based on the growth of the information labor force is rejected

axioms for health care resource allocation this paper examines principles of health care resource allocation based on axioms for individual preferences and distributive justice we establish axioms for representing individual preferences by quality adjusted life years qalys as well as axioms for existence of a social welfare function depending only on qalys a symmetric cobb douglas social welfare function is characterized by an axiom stating that social welfare is anonymous with respect to the distribution of individual life years replacing this axiom with an axiom of non age dependence we obtain a characterization of a utilitarian social welfare function with certain weights further we give axioms for a social welfare function being a weighted sum of power transformations of individual qalys

capital market information and industrial performance the role of west german banks in orthodox theory external capital markets play a dual role supplying various forms of investment finance and disciplining firms which are inefficient or fail to pursue profit goals an extensive literature speaks of the efficiency of external capital markets meaning that firms can make production investment decisions and investors can choose among the securities that represent ownership of firms activities under the assumption that security prices at any time fully reflect all available information fama i970 1 however this concept of efficiency is purely technical it depends critically on what information is available and we know there are problems of appropriability and failure in information markets deriving ultimately from certain peculiarities of information as a commodity arrow i962 thus another growing literature focusses on problems of achieving equilibrium in markets where agents are imperfectly or asymmetrically informed amongst other things this literature shows that informational failures of the kind in question can lead to capital rationing in loan and credit markets and the use of strict collateral requirements as screening devices jaffee and russell i976 stiglitz and weiss i98i cable and turner i983 these may then be expected to affect the efficiency of individual firms and the system as a whole capital shortage implies that some profitable investment opportunities are foregone and production choices may also be distorted by the need to satisfy additional financial constraints contrived to elicit signals of creditworthiness of the firms undertaking them similarly the disciplining role of external capital markets can be impaired by information impactedness williamson i975 and the costs of mobilising and giving effect to shareholders preferences thus in the principal agent framework developed by jensen and meckling i976 and fama i980 the degree of constraint on managerial pursuit of non profit goals as posited by managerial theorists depends on the transactions costs of stock owner intervention the result is an optimal degree of departure from cost minimising profit maximising behaviour determined by the level of transactions costs institutional factors which affect the way information is distributed amongst agents can therefore have an important bearing on allocative and technical efficiency and the west german system of industrial finance provides an in

pareto principles from inch to ell abstract under mild conditions including the possibility of compensation by monetary transfer this paper shows that all versions of the pareto principle viz the pareto indifference the weak pareto the strong pareto and the full pareto are in fact mutually equivalent

strategy structure and performance of korean business groups a transactions cost approach the authors use the transactions cost approach to analyze the diversification strategy and the resulting structure chosen by korean business groups to overcome market imperfections prevalent in developing countries business groups that have multidivisional struc ture are thought to show superior economic performance because such s tructure reduces transactions costs arising from organizational failure also major korean business groups have a relational structure showing both vertical integration and the characteristics of the conglomerate the authors modify the model of r e caves and m uekusa 1976 used for japan to obtain the empirical result tha t group affiliated firms show superior economic performance copyright 1988 by blackwell publishing ltd

when individual preferences defy sustainability can merit good arguments close the gap in this paper we discuss how merit good arguments may contribute to discussions about sustainability to this end we clarify how merit good arguments deviate from individual preferences and relate the justification for deviations from individual preferences to two conceptions of well being an informed preference satisfaction and a perfectionist conception building on this framework we analyze how merit good arguments can be helpful for discussing sustainability as justice what challenges merit good arguments pose to future generations and whether they can serve as a normative justification for green nudges the analysis yields two main insights first a reflection on the concept of merit goods is helpful in sorting out the different justifications that sustainability interventions may rely on in particular it allows separating the challenges of redistribution internalization of externalities and increasing individual consumption of particular merit goods such as health care or education more clearly second the precise notion of merit goods by itself however only offers a limited contribution and does not represent a blank check to justify deviations from individual preferences

on the efficiency of equal sacrifice income tax schedules abstract in an economy which primitives are exactly those in mirrlees 1971 we investigate the efficiency of tax schedules derived under the equal sacrifice principle for a given exogenous government consumption level we assess whether there is an alternative tax schedule that raises more revenue while delivering less utility to no one for our preferred parametrizations we find that inefficiency only arises at the top of the income distribution for marginal tax rates well above the ones we currently observe in most countries we also recover the implicit marginal social weights associated with the equal sacrifice schedule and find them not to be monotonic in types for the environments we study

information and economic analysis a perspective ten years ago i delivered a paper before this group with the title information and economic analysis i chose the title deliberately i did not call the subject on which i was speaking the economics of information because to do so would have been to suggest that my topic like the economics of agriculture or the economics of industry or the economics of labour represented another branch of specialisation within economics i wanted to suggest that informational considerations were in fact central to the analysis of a wide variety of phenomena that they constituted a central part of the foundations of economic analysis at the time though economists had long paid lip service to the importance of information there was little formal literature the last decade has seen a burgeoning of the literature it has become to the late 7o s and early 8o s what growth theory was to the early 6o s and it has been greeted with some of the same scepticism there seems to be a myriad ofspecial cases and few general principles the little examples are often contrasted unfavourably with the generality of general equilibrium theory what have we learned have diminishing returns set in are there fruitful directions for future research and if so what are they these are the questions which i wish to address here the work of the past decade has made i think a fundamental and lasting contribution to economic analysis the contributions have been both negative and positive we have learned that much of what we believed before is of only limited validity that the traditional competitive equilibrium analysis though having the superficial appearance of generality in terms of superscripts and subscripts is indeed not very general the theory is not robust to slight alterations in the informational assumptions it is but a special and not very plausible example among the possible set of informational assumptions which can be employed to characterise an economy at the same time the theory has been able to provide insights into phenomena about which the traditional model had nothing to say or which seemed inconsistent or inexplicable within the competitive paradigm it has provided some of the micro foundations for macro economics it has provided the basis of a new theory of the firm of a new new welfare economics and of a theory of economic organisation including a comparison of economic

opportunism incentives and the m form hypothesis a laboratory study abstract opportunism is one central premise of the m form hypothesis this premise is investigated in a laboratory experiment using m form and u form organizations under incentives based on corporate profit and divisional profits there was greater opportunism under u form organization than under the m form and under divisional profit than under corporate profit incentives additionally a misguided altruism lead a number of individuals to misrepresent information the m form yields higher performance than the u form also corporate profit incentives yield higher total profit than divisional profit incentives the results partially explain why empirical studies do not strongly support the m form hypothesis

government size and economic growth a new framework and some evidence from cross section and time series data a study of the impact of government size on economic performance and growth is important theoretically one point of view suggests that a larger government size is likely to be detrimental to efficiency and economic growth because for example i government operations are often conducted inefficiently ii the regulatory process imposes excessive burdens and costs on the economic system and iii many of government s fiscal and monetary policies tend to distort economic incentives and lower the productivity of the system at the other extreme one can identify some points of view that assign to the government a critical role in the process of economic development and could argue that a larger government size is likely to be a more powerful engine of economic development there are several arguments on which the latter point of view is based these include besides others i role of the government in harmonizing conflicts between private and social interests ii prevention of exploitation of the country by foreigners and iii securing an increase in productive investment and providing a socially optimal direction for growth and development

any non welfarist method of policy assessment violates the pareto principle a comment in a recent article kaplow and shavell 2001 claim that any methodof policy assessment that is not purely welfarist violates the pareto prin ciple kaplow and shavell use the term welfarism to describe notionsof social welfare under which assessment of policies depends exclusivelyon their effects on individuals utilities p 281 a welfarist policy as sessment uses a social welfare function from the set

ces production functions in manufacturing and problems of industrialization in ldcs evidence from korea information about the elasticity of substitution between capital and labor is very important in ldcs for several reasons first development policies in many ldcs pursue both rapid industrialization and widespread distribution of its benefits by expanding industrial employment opportunities if the elasticity of substitution is high it is relatively easy to expand employment opportunities without sacrificing output growth by manipulating relative factor prices properly or for that matter by reducing the wage rental ratio since the factor intensities of output depend on relative factor prices second high elasticity of substitution makes possible a flexible response to external changes for example a factor price change in the international market i e an oil price shock can be partially absorbed by adopting laborintensive production processes in this article i am going to discuss ces production functions for two digit industries in korea one of my main purposes in this article is to show empirically that the elasticities of substitution are not zero in almost all of korea s industries regardless of the firm s size 2 furthermore i shall show that production functions differ across different size groups of business firms in a given industry since it is widely acknowledged that wage rental ratios in small and medium firms are lower than in large firms 3 nonzero elasticities of substitution between labor and capital in small medium firms will have an important policy implication that is by encouraging the activities of smalland medium sized firms one can expand employment opportunities in the manufacturing sector and enhance the efficiency of the economy by adjusting the industrial structure to be consistent with domestic factor endowments it is conceivable that the direct importation of production technologies

liberal egalitarianism and the harm principle this paper analyses the implications of classical liberal and libertarian approaches for distributive justice in the context of social welfare orderings an axiom capturing a liberal non interfering view of society named the weak harm principle is studied whose roots can be traced back to john stuart mill s essay on liberty it is shown that liberal views of individual autonomy and freedom can provide consistent foundations for social welfare judgements in both the finite and the infinite context in particular a liberal non interfering approach can help to adjudicate some fundamental distributive issues relative to intergenerational justice however a surprisingly strong and general relation is established between liberal views of individual autonomy and non interference and egalitarian principles in the rawlsian tradition

the promise of positive optimal taxation normative diversity and a role for equal sacrifice abstract a prominent assumption in modern optimal tax research is that the objective of taxation is utilitarian i present new survey evidence that most people reject this assumption s implications for several prominent features of tax policy instead preferring tax policies based at least in part on a classic alternative objective the principle of equal sacrifice i generalize the standard model to accommodate this preference for a mixed objective proposing a method by which to make disparate criteria commensurable while respecting pareto efficiency then i show that optimal policy in this generalized model calibrated to the survey evidence and u s microdata is capable of quantitatively matching several features of existing tax policy that are incompatible in the conventional model but widely endorsed in the survey and reality including the coexistence of substantial redistribution and limited tagging together these findings demonstrate the potential of a positive theory of optimal taxation

the combinatorial assignment problem approximate competitive equilibrium from equal incomes this paper proposes a new mechanism for combinatorial assignment for example assigning schedules of courses to students based on an approximation to competitive equilibrium from equal incomes ceei in which incomes are unequal but arbitrarily close together the main technical result is an existence theorem for approximate ceei the mechanism is approximately efficient satisfies two new criteria of outcome fairness and is strategyproof in large markets its performance is explored on real data and it is compared to alternatives from theory and practice all other known mechanisms are either unfair ex post or manipulable even in large markets and most are both manipulable and unfair

the global impact of information technology abstract the paper explores the impact of information technology on the worldwide distribution of income employment and growth a review of the empirical literature is used to quantify the impact of information technology on productivity in different sectors and groups of countries an economic model of the global economy is then used to calculate the possible impact of information technology on international and domestic distribution and employment a number of alternative possibilities are considered i industrial countries are the most successful in introducing the new technology ii the technology turns out to be capital saving rather than labor displacing iii the rate of diffusion to developing countries increases iv the small scale and decentralizing potential of information technology is exploited the calculations suggest that indirect effects arising from international and intersectoral competition are at least as important as direct effects and that the distribution of gains from information technology depends as much upon what technology is introduced as on where it is introduced

internal capital market controls and financial performance in multidivisional firms it is proposed that within the population of m form firms the control systems necessary to realize economic benefits from interrelationships between subunits o f a firm are incompatible with the systems necessary to realize benef its from an m form type internal capital market this hypothesis is t ested on 156 large u k firms questionnaire data are used to classif y the firms according to their internal control characteristics the findings provide tentative support for the hypothesis copyright 1988 by blackwell publishing ltd

negative marginal tax rates and heterogeneity the bulk of the theory of optimal taxation recommends that the marginal tax rate be everywhere positive labor supply is distorted downwards compared with laissez faire the conditions under which the result holds continuous labor supply or intensive margin unobserved productivity constant opportunity cost of work utilitarian planner with a redistributive motive towards lower incomes have been thoroughly investigated jesus seade 1977 1982 ivan werning 2000 martin f hellwig 2007 the purpose of the present paper is to describe how negative marginal tax rates can be optimal keeping with the intensive set up largely studied in the literature when there are multiple dimensions of heterogeneity indeed james a mirrlees 1976 in its section iv indicates along a line that will be pursued further here that the sign of the marginal tax rate cannot be predicted when the agents in the economy differ along several dimensions of heterogeneity workers differ in both their productivities and opportunity costs of work under utilitarianism heterogeneity comes into play through its impact on cardinal utilities how social weights or marginal utilities of income vary with income determines the shape of the optimal tax scheme conditionally on income utility and more importantly its derivative with respect to income may either decrease or increase with work opportunity costs this may vary according to circumstances depending on whether the cost is associated with poor living conditions i e a handicap or reflects a taste for leisure or opportunities outside the labor market such as gardening at home or black market activities for a given income the social weight is proportional to the expected marginal utilities where the expectation is taken over the distribution of work opportunity costs at this income level therefore the social weight curve depends on both the specification of the cardinal utility function and on how the distribution of work opportunity costs changes with income the fact that heterogeneity can blur the redistribution motive through the possible correlation between ability and onerousness of work has been discussed in models where agents have a finite number of types a pioneer work is that of joseph e stiglitz 1982 who shows that the high skilled individual should face a negative marginal tax rate if the low skilled individual s upward incentive constraint binds which is the case if social weights are increasing in type the importance of this observation for policy was pointed out in katherine cuff 2000 who is the first to explicitly link social weights to the opportunity cost of work using alternative choices of cardinal utilities in a model with four types combining two values for productivity and two values for the cost of work robin boadway et al 2002 showed how it can be optimal to have binding upward incentive constraints when high opportunity costs are associated with small social weights

trade and structural change nics and next tier nics as transitional economies abstract the paper finds a strong association between rapid change in the sectoral composition of output and exports structural change and rapid export growth in the newly industrializing countries capital formation appears to be encouraged in dynamic economies by the underpricing of investment goods vis a vis consumption and government goods within these economies also the underpricing of investment goods in dynamic economies is relatively greater than in less dynamic economies whereas other research has found low price distortion to be associated with high growth and an outward rather than an inward looking orientation these associations are seriously challenged and more caution is urged in reaching generalized conclusions

the adoption of the m form organizational structure a test of imitation hypothesis the study of organizational adoption of administrative innovations has been generally guided by the imitation hypothesis this hypothesis states that within a relevant population of firms an innovation is first adopted by a select few innovators who communicate and influence others to adopt it resulting in a predictable diffusion pattern using data on the adoption of the m form organizational structure this paper reexamines this hypothesis based on the reported results we cannot reject the null hypothesis that organizational adoption of administrative innovations is characterized by a white noise process this result brings into question the appropriateness of the imitation hypothesis limitations and implications of the results are discussed

korea in the 1990s making the transition to a developed economy abstract thanks to rapid economic growth over the past quarter century korea today has emerged as one of the newly industrializing countries with the greatest promise of making a successful transition to a fully industrialized nation in its efforts to manage this transition korea will face many challenges ranging from protectionism abroad to the need to ensure more even income distribution at home the strategy korea should adopt to meet those challenges is one of fully liberalizing policies in every sector of its economy as the key components of this strategy korea must restructure its financial and agricultural systems while maintaining price stability and redefining the role of the government in economic and social development if it follows such a strategy korea in the year 2000 could well be a developed nation with an important role in upholding the international economic system and maintaining world peace

internal organization and economic performance an empirical analysis of the profitability of principal firms business historians have long been aware that organizational innovations have had remarkable productivity ramifications a h cole has asserted that if changes in business procedures and practices were patentable the contributions of business change to the economic growth of the nation would be as widely recognized as the influence of mechanical inventions 9 pp 61 62 some economists have come to recognize the role of organizational innovation kenneth arrow noting that truly among man s innovations the use of organization to accomplish his ends is among both his greatest and earliest 2 p 2441 oliver williamson 271 has further championed the study of organizational innovation doing much to provide the theoretical underpinnings necessary to bring the topic into the corpus of economic theory furthermore richard caves has observed that both corporate strategy and organizational structure influence the economic performance of the firm and the market in which it sells 6 p 641 however structural parameters are absent from the neoclassical theory of production which masquerades as the economic theory of the firm developments in the theory of the firm are unlikely to accommodate organizational structure considerations until connections between structure and performance have been demonstrated empirically the purpose of this paper is to explore the relationships between a particular kind of decentralized and divisionalized internal hierarchical structure what oliver williamson has called the m form innovation 27 ch 81 and firm profitability in essence the methodology involves examining the differential performance between the m form innovator in an industry and its principal rival application of two non parametric statistical tests the sign test and the wilcoxon matched pairs signed ranks test is supportive of the hypothesis that the m form structure is associated with superior firm

on the impossibility of complete non interference in paretian social judgements abstract we study a principle of non interference in social welfare judgements non interference captures aspects of liberal approaches particularly a millian approach to social decision making in its full generality non interference produces an impossibility result together with weak pareto optimality it implies that a social welfare ordering must be dictatorial however interesting restricted versions of non interference are compatible with standard social welfare orderings

the rise of economics in competition policy a canadian perspective competition policy in canada and elsewhere has changed remarkably over the last 50 yearsin large measure due to advances in economics in this article we trace the impact of developments in industrial organization on the three central areas of competition policy cartels single firm conduct and mergers we focus on canadian competition policy but draw comparisons with developments in the united states and europe

hierarchies and markets abstract whereas previous empirical studies have found performance gains from the adoption of multidivisional organization in u s and u k companies this paper reports a reduction in profitability for german m form firms for several years following reorganization with no sign of an eventual positive gain these results emerge from a cross section analysis of 48 among the top 100 german companies we suggest the constrasting results may flow from certain legal and institutional features not present in the u s and u k attenuating potential gains and enlarging short run transactions costs these include the role of the banks the relative concentration of shareholdings and the dual system of company boards

economic evaluation of services for a national health scheme the case for a fairness based framework in this paper we argue that the usual framework for evaluating health services may need modification in the context of a national health scheme nhs some costs and benefits may need to be ignored or discounted others included at face value and some transfer payments included in the decision algorithm in contrast with the standard framework we argue that economic evaluation in the context of an nhs should focus on social transfers between taxpayers and beneficiaries and that the nature and scope of these transfers is determined by the level of social generosity some of the implications of a modified framework are illustrated with a re examination of i costs and transfer payments ii unrelated future costs iii moral hazard and iv the rule that marginal costs should equal marginal benefits we argue that an explicitly fairness based framework is needed for the evaluation of services in an nhs in contrast the usual welfare economic theoretic framework facilitates the sidelining of issues of fairness

diffusion of the m form structure in the u k rate of imitation inter firm and inter industry differences abstract this paper presents the results of an empirical investigation of the diffusion of the multidivisional form structure among a sample of large u k quoted companies it is shown that the diffusion process resembles that reported for complex capital embodied innovations in the literature in cross sectional analyses the determinants of the delay in adoption are examined it is found that size diversification and less clearly merger intensity are significantly positively related to the speed of imitation in confirmation on the m form hypothesis inter industry differences are not generally found to be important apart from a manufacturing service distinction

are purchased information services underused in manufacturing evidence from japan korea and taiwan macro production functions which include purchased information services as an intermediate input are estimated for the manufacturing sectors of japan korea and taiwan the aim is to assess the degree of suboptimal use of this input similar previous studies mainly concentrated on the us using single equation estimation methods using a translog function approach the results in this study seems to indicae hat purchased information services are used suboptimally in the manufacturing sectors of all three economies the largest suboptimal use is observed in korea economic policies fostering the development of information service industries might therefore be more urgent in nics than in developed economies however out results are subject to the assumption of perfect competition in product and factor markets

technology strategy governance structure and interdivisional coordination abstract this paper studies how various organizational forms compare in their capacities to solve coordination problems created by technological interdependence between firms divisions i contrast the organizational mechanisms used by two firms ibm and general motors to address these problems while it is widely recognized that centralization distorts incentives facing division managers this paper highlights its benefits when there are large potential gains from agreement on technological standards the examples show how a centralized governance structure supported by lower powered incentives facilitates interdivisional coordination this suggests a refinement of the theory of organizational form based on how firms resolve the tensions between strategic planning and the measurement of organizational units performances

generalized social marginal welfare weights for optimal tax theory this paper proposes to evaluate tax reforms by aggregating money metric losses and gains of different individuals using generalized social marginal welfare weights optimum tax formulas take the same form as standard welfarist tax formulas by simply substitut ing standard marginal social welfare weights with those generalized weights weights directly capture society s concerns for fairness without being necessarily tied to individual utilities suitable weights can help reconcile discrepancies between the welfarist approach and actual tax practice as well as unify in an operational way the most prominent alternatives to utilitarianism such as libertarianism equality of opportunity or poverty alleviation jel d60 d63 h21 h23 i38