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THEORIES OF THE FIRM IN ENGLAND BEFORE COASE: STEMMING THE TIDE OF ‘RATIONALIZATION’ ON THE EVE OF “THE NATURE OF THE FIRM”

Published online by Cambridge University Press:  12 November 2015

Carlo Cristiano
Carlo Cristiano*
Affiliation:
University of Pisa.
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Abstract

Before the publication of Ronald Coase’s “The Nature of the Firm,” new developments in the theory of the firm were under way in the works of Arnold Plant at the LSE, and Dennis Robertson, Frederick Lavington, and Austin Robinson among the Cambridge Marshallians. Although in disagreement on industrial policy, these economists shared the belief that the common view that bigger firms are always more efficient—a very popular view within the movement for industrial ‘rationalization’—was untenable from a theoretical point of view. In the works of these economists the ‘make or buy’ scheme is sometimes employed, and Coase’s idea of a cost for using the market can be found, in implicit form, in some writings of Plant that appeared before Coase’s article. But the fundamental principle that we now call “transaction costs” was hardly of any help to any of those who, at Cambridge as well as at the LSE, were insisting on the costs of coordination as a limit to the growth of the firm.

Type
Articles
Information
Journal of the History of Economic Thought , Volume 37 , Issue 4 , December 2015 , pp. 597 - 614
Copyright
Copyright © The History of Economics Society 2015 

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