The Mechanisms of Governance
Oxford University Press, 1996 M02 29 - 448 pages
This book brings together in one place the work of one of our most respected economic theorists, on a field in which he has played a large part in originating: the New Institutional Economics. Transaction cost economics, which studies the governance of contractual relations, is the branch of the New Institutional Economics with which Oliver Williamson is especially associated. Transaction cost economics takes issue with one of the fundamental building blocks in microeconomics: the theory of the firm. Whereas orthodox economics describes the firm in technological terms, as a production function, transaction cost economics describes the firm in organizational terms, as a governance structure. Alternative feasible forms of organization--firms, markets, hybrids, bureaus--are examined comparatively. The analytical action resides in the details of transactions and the mechanisms of governance. Transaction cost economics has had a pervasive influence on current economic thought about how and why institutions function as they do, and it has become a practical framework for research in organizations by representatives of a variety of disciplines. Through a transaction cost analysis, The Mechanisms of Governance shows how and why simple contracts give way to complex contracts and internal organization as the hazards of contracting build up. That complicates the study of economic organization, but a richer and more relevant theory of organization is the result. Many testable implications and lessons for public policy accrue to this framework. Applications of both kinds are numerous and growing. Written by one of the leading economic theorists of our time, The Mechanisms of Governance is sure to be an important work for years to come. It will be of interest to scholars and students of economics, organization, management, and law.
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Transaction Cost Economics
Concepts and Applications
Using Hostages to Support Exchange
Spontaneous and Intentional Governance
Corporate Finance and Corporate Governance
Calculativeness Trust and Economic Organization
Strategizing Economizing and Economic Organization
The Institutions and Governance of Economic Development
Controversy and Perspectives
The Politics and Economics of Redistribution and Inefficiency
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adaptation added alternative analysis antitrust applies approach argument assessment asset specificity assumes attributes become behavior benefits better bounded calculativeness capital central changes Chapter commitments comparative competition concerned condition contract contract law corporate court credible deal debt decision dependency described developed discretion discussed economic organization economists effects efficiency equity especially examined example exchange failure finance firm forms governance governance structures hazards Herbert Simon hierarchy important incentive individual industry institutional integration interest internal investment issues kind less limits managers matter mechanisms mode observed operating opportunism ordering original parties political possibility practices problem question rationality realized reasoning reference relation reputation requires respects response result rules social strategic structures supply theory tion trading transaction cost economics trust unit Williamson
Page 224 - As there is a degree of depravity in mankind, which requires a certain degree of circumspection and distrust : so there are other qualities in human nature, which justify a certain portion of esteem and confidence. Republican government presupposes the existence of these qualities in a higher degree than any other form.
Page 58 - ... a transaction occurs when a good or service is transferred across a technologically separable interface.
Page 36 - The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world— or even for a reasonable approximation to such objective rationality.
Page 30 - How can it be that institutions which serve the common welfare and are extremely significant for its development come into being without a common will directed toward establishing them?
Page 167 - It is organization which gives birth to the dominion of the elected over the electors, of the mandatories over the mandators, of the delegates over the delegators. Who says organization, says oligarchy.
Page 8 - An economist by training thinks of himself as the guardian of rationality, the ascriber of rationality to others, and the prescriber of rationality to the social world.
Page 146 - It is a profoundly erroneous truism, repeated by all copy-books and by eminent people when they are making speeches, that we should cultivate the habit of thinking of what we are doing. The precise opposite is the case. Civilization advances by extending the number of important operations which we can perform without thinking about them.
Page 48 - Therefore, a prudent ruler ought not to keep faith when by so doing it would be against his interest, and when the reasons which made him bind himself no longer exist. If men were all good, this precept would not be a good one; but as they are bad, and would not observe their faith with you, so you are not bound to keep faith with them.
Page 199 - A private-enterprise system cannot function properly unless property rights are created in resources, and, when this is done, someone wishing to use a resource has to pay the owner to obtain it. Chaos disappears; and so does the government except that a legal system to define property rights and to arbitrate disputes is, of course, necessary.
Page 112 - The institutional environment is the set of fundamental political, social and legal ground rules that establishes the basis for production, exchange and distribution.