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It's weird. We have this notion in America that corporations are (or are supposed to be) efficient. They're not. Markets are if you grant a series of tenuous as
by xnull 12y ago
It's weird. We have this notion in America that corporations are (or are supposed to be) efficient. They're not. Markets are if you grant a series of tenuous assumptions. Markets are the fair efficient competition between unfair and inefficient firms.
- enraged_camel 12y agoYeah, if anything, corporations are islands of communism where resources are distributed by central planners (i.e. executive management). And it has been proven over and over that central planning is a horribly inefficient way to distribute resources.
- jacques_chester 12y agoMarkets involve search costs, planning involves calculation costs. Sometimes one exceeds the other, so one form of allocation emerges over the other: http://en.wikipedia.org/wiki/The_Nature_of_the_Firm http://en.wikipedia.org/wiki/The_Nature_of_the_Firm
- WildUtah 12y agoGood comment, jacques. The Wiki link is to the key Nobel Memorial Prize-winning paper on exactly the mystery the gp and ggp and gggp were trying to express. Coase clarifies and organizes the question of organizational inefficiency in firms in a market with a lightning flash of deep insight that changes the way you think forever. And the paper is short. Full text http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0335.1937.tb00002.x/full http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0335.1937....
- jjoonathan 12y agoIf central planning is so inefficient, why are centrally planned mega-corporations beating the crap out of ad-hoc networks of smaller companies in retail (for example)?
- abfan1127 12y agoits a combination of economies of scale and they can force regulations too costly to compete at on on smaller scales, which I suppose is another economy of scale.
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- judk 12y agoPreferential tax treatment for in-firm transactions, regulatory capture, and economies of scale, and subsidies from small profitable corners.
- jjoonathan 12y ago> economies of scale So what you're saying is that it's actually more efficient? > subsidies from small profitable corners The inefficient parts subsidize already efficient parts making both parts more efficient in the process.
- enraged_camel 12y ago>>So what you're saying is that it's actually more efficient? No. Simply put, there are different types of efficiency. The term "economies of scale" refers to spreading the fixed costs of production among a greater number of units of output. They are about production efficiency, and to a lesser extent, operational efficiency. What we are talking about here is efficiency when it comes to the allocation of resources across different business units. Central planning is very inefficient in this regard. >>The inefficient parts subsidize already efficient parts making both parts more efficient in the process. No one is arguing that this is not the case. What might be true, however, is that we may not need some of those inefficiencies in the first place. Our current and most popular model of corporation involves central planners. This doesn't necessarily mean that we won't find a more efficient model of corporate management.