4 ms·

Wasn't Google a market economy internally?

• azernik 9y ago
  The Theory of the Firm claimed that those information limitations were the limiting factor on firm size, bit a motivation. (Motivation for large firms being to avoid transaction costs.) Some very large companies, like Google/Alphabet and Samsung, are more focused on concentration of wealth (ie functioning as holding companies) than on avoiding transaction costs, and hence have internal market economies. Hence oddities such as Samsung's semiconductors division selling screens and memory, often custom-designed, to the competitors of Samsung's cellphone division - they act as separate companies reach pursuing their own profit. In that sense, conglomerates are sometimes not "firms" in the traditional economic sense.