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Economic Efficiency of the Organizational Decisions of the Firm - T. V. S. Ramamohan Rao

Economic Efficiency of the Organizational Decisions of the Firm

Paperback ISBN: 9783540515708
Number Of Pages: 227

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Over the past several years there has been an awareness that mar- kets, contractual arrangements, and hierarchical organizations can be uti- lized as alternative modes of coordinating resource utilization in the con- text of the firm. In most practical situations mixed forms of organization are more frequent. That is, non-market coordination mechanisms are being utilized even in predominantly market oriented economies. The reasons for the use of one of these organizational modes over the others are still being examined extensively. Very often, asset specificity and bilateral monopoly, risk sharing under uncertainty, transaction cost considerations, and/or technological externalities (economies of scope) have been considered as the major reasons for preferring one of these modes over the others. However, the ultimate effect on the performance of the firm, of any of these aspects which result in the adoption of any specific organizational pattern, has to be through the cost curve and/or the demand curve. The neoclassical welfare concepts, which have been developed to examine the efficiency in the functioning of markets, are well known. The sources of inefficiency in the performance of the firm under different mar- ket structures are also well documented. However, there is as yet no well established set of concepts to examine the economic efficiency of the other organizational forms. It is not clear that the neoclassical welfare concepts are not relevant even under the new organizational setting. Studies of this nature are a relatively new area of economic research.

1. The Firm and Its Organization.- 1.1. Market Exchange.- 1.2. Monopolistic Competition.- 1.3. Contractual Relations.- 1.4. Internal Organization.- 1.5. Organizational Design.- 1.6. Nature of the Study.- 2. Welfare and Inefficiency.- 2.1. The Managerial Milieu and Welfare.- 2.2. The Neoclassical Paradigm.- 2.3. The Baumol Firm.- 2.4. External Constraints and Fixed Costs.- 2.5. Discretionary Managerial Behavior.- 2.6. Managerial Inefficiency.- 3. Efficiency of Organizational Decisions.- 3.1. Organization and Welfare.- 3.2. Internal Pressure and Cost.- 3.3. External Pressure and Efficiency.- 3.4. Basic Model.- 3.5. Conditions for Organizational Efficiency.- 3.6. Emergence of Inefficiency.- 3.7. Conclusion.- 4. Quality of Products.- 4.1. The Issues.- 4.2. Durability of Products.- 4.3. Ex Post Demand as Standard.- 4.4. Demand for Quality.- 4.5. Quality Preference and Efficiency.- 4.6. Conclusion.- 5. Search Costs, Advertising and Welfare.- 5.1. The Issues.- 5.2. Conventional Wisdom.- 5.3. Search Costs.- 5.4. Efficiency of Advertising Revisited.- 5.5. Conclusion.- 6. Transaction Costs and Vertical Integration.- 6.1. Vertical Integration and Welfare.- 6.2. Internal and External Pressure.- 6.3. Costs and Efficient Integration.- 6.4. Conditions for Efficiency.- 6.5. Emergence of Inefficiency.- 6.6. Conclusion.- 7. Inventory Decisions.- 7.1. The Basis for Inventory Holding.- 7.2. Impact of Inventories on Welfare.- 7.3. Marginal Concepts.- 7.4. Welfare Maximization.- 7.5. Other Sources of Inefficiency.- 7.6. Multiperiod Generalization.- 7.7. In Retrospect.- 8. Hierarchical Organizations.- 8.1. A Change in Emphasis.- 8.2. Size and Organization.- 8.3. The Basic Model.- 8.4. Choice of the Firm Size.- 8.5. Compliance and Management.- 8.6. Conclusion.- 9. Information, Monitoring and Incentives.- 9.1. The Issues.- 9.2. Basic Response to Information Asymmetry.- 9.3. Welfare Maximization.- 9.4. Budgets and Contracting.- 9.5. Monitoring the Group.- 9.6. Incentives and Organizational Behavior.- 9.7. Conclusion.- 10. In Retrospect.- 10.1. Technical Inefficiency Revisited.- 10.2. Economic Inefficiency Revisited.- 10.3. Other Conceptual Problems.

ISBN: 9783540515708
ISBN-10: 3540515704
Audience: General
Format: Paperback
Language: English
Number Of Pages: 227
Publisher: Springer-Verlag Berlin and Heidelberg Gmbh & Co. Kg
Country of Publication: DE
Dimensions (cm): 24.41 x 16.99  x 1.3
Weight (kg): 0.4