Coases theory of the firm

Coase (193 7) contrasted the resource allocation role of the market and the firm. He contended that the market influenced resource allocation by price signals, while within the firm it was assumed resources that were allocated or moved at the direction of an ''entrepreneur co-ordinator'' and the ''distinguishing mark of the firm is the suppression of the price mechanism.'' Thus, ''it is clear that these (the market and the firm) are alternative methods of co-ordinating production'' (p. 42)....

Case Study 131 Sir Richard Branson and the Virgin Group

Sir Richard Branson has exhibited many different aspects of entrepreneurship in the development and growth of the Virgin Group of companies. He and his company have continually started new entrepreneurial ventures and disposed of the financially successful ones to help finance new ones. His first venture was selling records and magazines by mail order, while still at school this became Virgin in 1970. He then developed a record label and record shops, which the company no longer owns....

Case Study 52 Estimating elasticities for petrol

Estimates of elasticities of demand are generally derived from modelling demand using regression analysis. These methods are discussed in Chapter 6, but an example of the outcomes for such studies is given below using petrol as its subject. Companies make estimates of own price elasticities of demand for their products. Likewise, academic economists undertake similar studies and many have been undertaken for products, such as alcoholic drinks, petrol and tobacco products, which governments in...

Williamsons Managerial Utility Model

Vertical Integration Model

Williamson 1963 sought to explain firm behaviour by assuming senior management seeks to maximize its own utility function rather than that of the owners. Managers find satisfaction in receiving a salary, knowing they hold a secure job, that they are important, have power to make decisions and receive professional and public recognition. Of these, only salary is directly measurable in monetary terms, but the other non-pecuniary benefits are related to expenditures on Staff S , the more staff...