Division of Labor, Variability, Coordination, and the Theory of Firms and Markets

1. Front Matter

   Pages i-xii

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2. Introduction

   • A. Camacho

   Pages 1-8

3. The Division of Labor and Communication

   • A. Camacho

   Pages 9-29

4. Variability and the Logic of Firms and Markets

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   Pages 30-45

5. The Internal Organization of Complex Teams

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   Pages 46-67

6. Variability, Coordination, Information Structure, and the Logic of Firms and Markets

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   Pages 68-81

7. Variability and the Logic of Firms, Markets, and other Arrangements

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   Pages 82-94

8. Adaptation Costs, Coordination Costs, and Optimal Firm Size

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   Pages 95-108

9. Indivisibilities

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   Pages 109-127

10. The Variability Approach and the Multiproduct Firm

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    Pages 128-138

11. Concluding Remarks

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    Pages 139-143

12. Back Matter

    Pages 144-153

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A new approach to explaining the existence of firms and markets, focusing on variability and coordination. It stands in contrast to the emphasis on transaction costs, and on monitoring and incentive structures, which are prominent in most of the modern literature in this field. This approach, called the variability approach, allows us to: show why both the need for communication and the coordination costs increase when the division of labor increases; explain why, while the firm relies on direction, the market does not; rigorously formulate the optimum divisionalization problem; better understand the relationship between technology and organization; show why the `size' of the firm is limited; and to refine the analysis of whether the existence of a sharable input, or the presence of an external effect leads to the emergence of a firm.
The book provides a wealth of insights for students and professionals in economics, business, law and organization.

• bounded rationality
• calculus
• economics

• The University of Illinois at Chicago, USA

  A. Camacho

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