Economic Efficiency of the Organizational Decisions of the Firm

1. Front Matter

   Pages I-XI

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2. The Firm and Its Organization

   • T. V. S. Ramamohan Rao

   Pages 1-20

3. Welfare and Inefficiency

   • T. V. S. Ramamohan Rao

   Pages 21-52

4. Efficiency of Organizational Decisions

   • T. V. S. Ramamohan Rao

   Pages 53-76

5. Quality of Products

   • T. V. S. Ramamohan Rao

   Pages 77-94

6. Search Costs, Advertising and Welfare

   • T. V. S. Ramamohan Rao

   Pages 95-120

7. Transaction Costs and Vertical Integration

   • T. V. S. Ramamohan Rao

   Pages 121-141

8. Inventory Decisions

   • T. V. S. Ramamohan Rao

   Pages 142-166

9. Hierarchical Organizations

   • T. V. S. Ramamohan Rao

   Pages 167-179

10. Information, Monitoring and Incentives

    • T. V. S. Ramamohan Rao

    Pages 180-201

11. In Retrospect

    • T. V. S. Ramamohan Rao

    Pages 202-212

12. Back Matter

    Pages 213-227

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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.

• Organisation
• efficiency
• integration
• organizations
• welfare

• Indian Institute of Technology, Kanpur, India

  T. V. S. Ramamohan Rao

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