The Organization of Labor: Dignity

Assume, arguendo, that the political reforms favored by radical economists and others will not be implemented immediately. Are there other measures that can and should be taken to mitigate the oppressiveness of the Authority Relation in the meantime? My examination of that question is in two parts. The literature on job satisfaction and alienation

The Organization of Labor: Concluding Remarks

Recall the contracting schema in section 4 of Chapter 1, where nodes A, B, and C are distinguished. The main implications of the transaction cost ap-proach to labor organization, as developed in this chapter, may be summarized with reference to that schema as follows: Labor market transactions located at node A are ones for

The Modem Corporation: Railroad Organization

The 1840s mark the beginning of a great wave of organizational change that has evolved into the modem corporation (Chandler, 1977). According to Stuart Bruchey, the fifteenth-century merchant of Venice would have understood the form of organization and methods of managing men, records, and investment used by Baltimore merchants in 1790 (1956, pp. 370-71).

The Modem Corporation: The M-Form Innovation

1. The Transformation  The most significant organizational innovation of the twentieth century was the development in the 1920s of the multidivisional structure. That development was little noted and not widely appreciated, however, as late as 1960. Leading management texts extolled the virtues of “basic departmentation” and “line and staff authority relationships,” but the special

The Modem Corporation Applications: Conglomerate and Multinational Enterprise

As discussed in earlier chapters, the inhospitality tradition regarded nonstandard contracting practices as presumptively unlawful. Nonstandard internal forms of organization have also been regarded with deep suspicion. The same technological orientation to economic organization plainly informed both of those approaches. Unless a clear-cut technological justification for the con- tracting practices or organizational structure in

The Modem Corporation: Concluding Remarks

There is widespread agreement, among economists and noneconomists alike, with the proposition that the modem corporation is an important and complex economic institution. Such agreement is mainly explained by the obtrusive size of the largest firms. The economic factors that lie behind the size, shape, and performance of the modem corporation, however, are poorly

Corporate Governance: Background

Observers of the corporate scene have long struggled with the dilemma of corporate control. It was originally expressed in terms of the strain between diffuse ownership and management. It has subsequently been enlarged to consider the problems of creating a mechanism to ensure that corporate management does right by “labor, suppliers, customers, and owners

Corporate Governance: A Contractual Assessment

The study of corporate contracting is complicated by interdependencies within and between contracts; changes in one set of terms commonly require realign- ments in others. It will nevertheless be more helpful to examine the contracts of corporate constituencies in a sequential rather than a fully interactive way. That completed, I shall then examine interaction

Corporate Governance: Management as a Constituency

1. Management Contracting A large difficulty in treating management’s contract with the corporation like those of other constituencies is that management is thought to be in effective control of the corporation. Rather than being responsive agents of the stock- holders, managers operate the firm with a keen eye to their own interests. Any proposal

Corporate Governance: Managerial Discretion and Organization Form

Enthusiasts of laissez-faire capitalism are loath to confront, and are sometimes schizophrenic on the subject of, managerial discretion. Focusing on any given time, they commonly deny the existence of managerial discretion. Comparing current practices with the past, however, those same enthusiasts point with pride to the development of new techniques that have brought managerial

Corporate Governance: Concluding Remarks

The composition and functions of the board of directors have been the subject of controversy at least since the exchange between Dodd and Berle in 1932.30 Recent commentary shows little signs of convergence. Thus Andrews (1982) favors the participatory model, whereby the board becomes implicated in the management of the firm, and characterizes the

Introduction to Franchise Bidding for Natural Monopoly

The case for a comparative institutional approach to regulation was succinctly put by Coase twenty years ago: Contemplation of an optimal system may provide techniques of analysis that would otherwise have been missed and, in certain special cases, it may go far to providing a solution. But in general its influence has been pernicious.

The Simple Franchise Bidding Scheme

Demsetz contends that even though efficiency considerations may dictate that there be only one supplier in a natural monopoly industry, the unregulated market price need display no elements of monopoly. Conventional analysis is flawed by a failure to distinguish between the number of ex ante bidders and the condition of ex post supply. Even

Franchise Bidding Elaborated

It will be useful to examine franchise contracts of three types: once-for-all contracts, which appear to be the type of contract envisaged by Stigler; incomplete, long-term contracts, which are favored by Demsetz; and recurrent short-term contracts, which Posner endorses. 1. Once-For-All Contracts  Stigler’s views on franchise bidding are limited mainly to an endorsement of

Franchise Bidding for Natural Monopoly: A Case Study

The requisite level of detail for assessing the efficacy of an organizational mode will vary with the circumstances. There plainly are regulatory matters for which detail of the kind developed above is unnecessary. The level of detail at whioh much of the regulatory dialog is conducted is often too ag- however, to ascertain “how

Franchise Bidding for Natural Monopoly: Concluding Remarks

Whatever their origins, the cost of good intentions needs to be evaluated. The comparative institutional approach to the study of economic organization is precisely designed to do that. This chapter examines the efficacy of franchise bidding schemes as an alternative to regulation in the provision of public utility services in circumstances where there are

The Oakland CATV Franchise Bidding Experience

Although the case study reported below cannot claim to be representative, it does reveal that many of the franchise concerns disscused in Chapter 13 are not purely imaginary. The study both indicates the importance of evaluating proposals to scrap regulation in favor of market alternatives in more micro-analytic terms and discloses that, in practice,

Antitrust Enforcement: Merger Policy

Changes in public policy toward vertical and conglomerate mergers have been described in Chapters 4 and 11. They do not require repeating here. The proposition that public policy toward mergers had undergone significant transformation is difficult to appreciate, however, without a statement of specifics. I attempt to give some background here. 1. The 1960s 

Antitrust Enforcement: Nonstandard Contracting

The inhospitality tradition to which 1 referred earlier9 held that nonstandard modes of contracting were presumptively anticompetitive. The argument, moreover, was very sweeping. No effort was made to delimit applications to a subset of activity where the anticompetitive concerns were thought to be especially severe. Rather, customer, territorial, and related contract restraints were held

Antitrust Enforcement: Strategic Behavior

The study of strategic behavior—by which 1 mean efforts by established firms to take up advance positions in relation to actual or potential rivals and/or to respond punitively to new rivalry—is enormously complex. The early entry barrier models emphasized ex ante positioning.15 More recent work on predatory pricing has emphasized ex post responses. Objections