DOCSLIB.ORG

Microfilmed 1996 Information to Users

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
Microfilmed 1996 Information to Users UMI MICROFILMED 1996 INFORMATION TO USERS This manuscript has been reproduced from the microfilm master. UMI films the text directly from the original or copy submitted. Thus, some thesis and dissertation copies are in typewriter face, while others may be from any type of computer printer. The quality of this reproduction is dependent upon the quality of the copy submitted. Broken or indistinct print, colored or poor quality illustrations and photographs, print bleedthrough, substandard margins, and improper alignment can adversely affect reproduction. In the unlikely event that the author did not send UMI a complete manuscript and there are missing pages, these will be noted. Also, if unauthorized copyright material had to be removed, a note wilt indicate the deletion. Oversize materials (e.g., maps, drawings, charts) are reproduced by sectioning the original, beginning at the upper left-hand comer and continuing from left to right in equal sections with small overlaps. Bach original is also photographed in one exposure and is included in reduced form at the back of the book. Photographs included in the original manuscript have been reproduced xerographically in this copy. Higher quality 6" x 9" black and white photographic prints are available for any photographs or illustrations appearing in this copy for an additional charge. Contact UMI directly to order. UMI A Bell & Howell Information Company 300 North Zed> Road, Ann Aibor MI 48106-1346 USA 313/761-4700 800/321-0600 LESSONS FOR THE DESIGN OF INTERCONNECTION PRICING POLICY IN THE TELECOMMUNICATIONS INDUSTRY: A POLICY LEARNING APPROACH DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Hyon Kun Kwok, B.A., M.P.A. The Ohio State University 1996 Dissertation Committee: A. Desai R. W. Backoff Advisor D. N. Jones School of Public Policy and Management R. W. Lawton UMI Number: 9639276 UMI Microform 9639276 Copyright 1996, by UMI Company. All rights reserved. This microform edition is protected against unauthorized copying under Title 17, United States Code. UMI 300 North Zeeb Road Ann Arbor, MI 48103 Dedicated to my parents ACKNOWLEDGMENTS I express sincere appreciation to Dr. Anand Dcsai for his support, encouragement, and guidance throughout the research. Thanks also go to the other members of my advisory committee, Drs. Robert Backoff, Douglas Jones and Ray Lawton for their thoughtful insight and recommendations. Special appreciation goes to my parents for their endless support and encouragement. To my wife, Moonsun, I offer sincere thanks for your patience, understanding, encouragement and support. VITA May 24, 1962 Bom - Daejeon, South Korea 1985 B. A., Department of Public Administration, Yonsci University, South Korea 1987 M.P.A., School of Public Administration, The Ohio State University, Columbus, Ohio 1988 - 1992 Graduate research associate, School of Public Policy and Management, The Ohio State University, Columbus, Ohio 1991 - present Doctoral candidate, School of Public Policy and Management, The Ohio State University, Columbus, Ohio FIELDS OF STUDY Major Field: Public Policy and Management TABLE OF CONTENTS Pape Dedication ........................................................................................................................... ii Acknowledgment ............................................................................................................... iii V ita........................................................................................................................................ iv List of Tables ........................................................................................................................... ix List of Figures ....................................................................................................................... x Chapters: I. Introduction .................................................. I II. Research Framework and M ethods .................................................................................... 6 A. Lesson-Drawing Framework .................................................................................. 6 1. Lesson-Drawing os Policy Learning .........................................................6 2. Lesson-Drawing as Comparative Public Policy Research .....................II 3. Operationalization of Four Analytic Stages ............................................ 13 a. Anchoring.......................................................................................13 b. Modeling .......................................................................................17 c. Comparing Conceptual Model with Domestic Program and Prospective Evaluation ......................................................... 17 B. M ethods................................................................................................... 19 1. Method of Model Building ......................................................................19 a. Policy Design as Product: Structural Logic Analysis .................19 b. Incorporation of Knowledge Utilization Perspective in Structural A nalysis ................................................................................25 c. Policy Design as Process: Problem Structuring Analysis ____ 27 d. Post-hoc Rationale for Information Treatment Process and Literature Selection Criteria ................................................ 30 2. Method of Lesson-Drawing..................................................................... 38 v a. Lesson-Drawing Criteria ............................................................. 38 b. Case S tu d y .................................................................................... 40 III. Historical Review of Econoic Thought and Economic Regulation in the United States ..................................................................................................................................... 41 A. Introduction .................................... 41 B. Historical Review of Early Economic Thought and Emergence of Modem Economic Regulation in the U.S ................................................................... 46 1. Overview ................................................................................................... 46 2. Classical Economic Thought and Emergence of Neoclassical Econom ics.........................................................................................49 3. Emergence of Natural Monopoly and Destructive Competition Theories ............................................................................................................52 4. Potential Competition and Laissez-faire Policy Defense.......................57 5. "New School" Political Economists and Economic Regulation ..........59 C. Behavioral Assumptions of Economic Regulation from Three Economic Perspectives................................................................................................... 65 1. Behavioral Assumptions of Economic Regulation from Institutionalist Perspective.........................................................................................65 a. Origin of Institutional Economics .............................................. 65 (1) Thorstcin Vcblcn ...........................................................69 (2) John R. Commons .........................................................72 (3) Comparison between Thorstcin Vcblcn and John R. Com m ons................................................................. 78 b. Market Perception and Economic Regulation from Institutionalist Perspective .................................................. 79 2. Behavioral Assumptions of Economic Regulation (Antitrust Policy) from Structuralist Perspective .........................................................86 a. Origin of Structuralism in Industrial Organization ...................86 b. Market Perception and Economic Regulation (Antitrust) from Structuralist Perspective .......................................................95 3. Behavioral Assumptions of Economic Regulation from Neoclassical Economic Perspective ....................................................................102 a. Development of Neoclassical Economics ................................102 b. Market Perception and Economic Regulation (Antitrust) from Chicago School Perspective...............................................I ll D. Normative Assumptions of Economic Regulation from Three Economic Perspectives..................................................................................................119 1. Introduction ..............................................................................................119 2. Institutionalist Perspective: Direct Regulation (Direct Performance Control) ............................................................................................121 3. Structuralist Perspective: Antitrust (Indirect Performance Control) ........................................................................................................ 131 4. Neoclassical Economic Perspective: Deregulation (Market Autonomy and Application of Market R ule)..................................................140 E. Sum m ary .......................................................................................................... 150 IV. Theoretical Review of Industrial Structural Policies for Telecommunications Industry in the United States ................................................................................................155
Load more

Recommended publications
  • American Political Thought: Readings and Materials Keith E. Whittington
    American Political Thought: Readings and Materials Keith E. Whittington Index of Materials for Companion Website 2. The Colonial Era, Before 1776 II. Democracy and Liberty John Adams, Letter to James Sullivan (1776) John Cotton, The Bloudy Tenent Washed and Made White (1647) John Cotton, Letter to Lord Say and Seal (1636) Jacob Duche, The Duty of Standing Fast in Our Spiritual and Temporal Liberties (1775) Massachusetts Body of Liberties (1641) James Otis, Rights of the British Colony Asserted and Proved (1764) Elisha Williams, The Essential Rights and Liberties of Protestants (1744) Roger Williams, The Bloudy Tenent Yet More Bloudy (1652) John Winthrop, Arbitrary Government Described (1644) John Winthrop, A Defense of an Order of Court (1637) John Winthrop, Defense of the Negative Vote (1643) III. Citizenship and Community Agreement among the Settlers of Exeter, New Hampshire (1639) Combination of the Inhabitants of the Piscataqua River for Government (1641) Robert Cushman, The Sin and Danger of Self-Love (1621) Fundamental Agreement, or Original Constitution of the Colony of New Haven (1639) Fundamental Orders of Connecticut (1639) Patrick Henry, Give Me Liberty Speech (1775) William Livingston, “The Vanity of Birth and Titles” (1753) Oath of a Freeman in Massachusetts Bay (1632) Thomas Tryon, The Planter’s Speech to His Neighbors and Countrymen (1684) IV. Equality and Status Address of the Mechanics of New York City (1776) Jonathan Boucher, Sermon on the Peace (1763) Charles Inglis, The True Interest of America (1776) William Knox, Three Tracts Respecting the Conversion (1768) William Byrd, Letter to Lord Egmont (1736) Samuel Sewall, The Selling of Joseph (1700) John Saffin, A Brief and Candid Answer (1701) John Woolman Some Considerations on Keeping Negroes (1762) V.
    [Show full text]
  • Indiana Magazine of History
    INDIANA MAGAZINE OF HISTORY ’Volume XLV SEPTEMBER,1949 Number 3 The Heroic Age of the Social Sciences Robert S. Fletcher* History, political theory, and economics were not wholly neglected even in the colonial colleges. But history was chiefly treated as the handmaiden of theology and the Greek and Latin classics, while economic and political matters were dealt with in the courses in moral philosophy and ethics. The American Revolution and the experience of constitu- tion-making gave a great impetus to the study of politics. In 1779, Thomas Jefferson was instrumental in bringing about a notable revision of the curriculum of William and Mary College whereby more emphasis was placed upon political studies; by 1792 a knowIedge of “NationaI Law, Law of Nations, and the general principles of politics” was required for graduation. Other colleges followed this example. In the two succeeding generations the Federalist was listed as a text in many catalogs, and Locke, Rousseau, Montesquieu, and the Declaration of Independence were often included in required reading. New books on moral philosophy appeared with an ex- panded political emphasis. In 1795 a professor at Columbia published a Systematic Treatise on Moral Philosophy: Com- prehending the Law of Nature-Ethics-Natural Jurispru- dence-General Economy-Politics-and the Lnw of Nations which he optimistically hoped would “inflame the American youth with a true love for their country.”’ The first rumblings of the industrial revolution produced a greater emphasis on economics (or political economy, as it wag called). Adam Smith’s famous but wordy and difficult *Robert S. Fletcher is .a member of the history department at Oberlin College, Oberlin Oho.
    [Show full text]
  • Modigliani's and Sylos Labini's Contributions to Oligopoly Theory
    The Origin of the Sylos Postulate: Modigliani’s and Sylos Labini’s Contributions to Oligopoly Theory by Antonella Rancan CHOPE Working Paper No. 2012-08 December 2012 The Origin of the Sylos Postulate: Modigliani’s and Sylos Labini’s Contributions to Oligopoly Theory* Antonella Rancan University of Molise (Italy) Email: [email protected] December 2012 * The paper benefited from a period of research at Duke University working on Modigliani’s Papers. I wish to thank the Hope Center and the David M. Rubenstein Rare Book, Manuscript, and Special Collections Library for financial support within the Economists’ Paper Project. I also thank the Special Collection Library staff for their kind availability. The paper was presented at the 2011 ESHET and STOREP conferences. I am especially grateful to the readers and discussants of different versions for their useful comments and suggestions. The Abstract of The Origin of the Sylos Postulate: Modigliani’s and Sylos Labini’s Contributions to Oligopoly Theory* Abstract Paolo Sylos Labini’s Oligopoly Theory and Technical Progress (1957) is considered one of the major contributions to entry-prevention models, especially after Franco Modigliani’s famous formalization. Nonetheless, Modigliani neglected Sylos Labini’s major aim when reviewing his work (1958), particularly his demonstration of the dynamic relation between industrial concentration and economic development. Modigliani addressed only Sylos’ microeconomic analysis and the determination of the long-run equilibrium price and output, concentrating on the role played by firms’ anticipations. By doing so he shifted attention from Sylos' objective analysis to a subjective approach to oligopoly problem. This paper discusses Sylos’ and Modigliani’s differing approaches, derives the origin of the Sylos postulate and sets Modigliani’s interpretation of Sylos’ oligopoly theory in the context of his 1950s research into firms’ behaviour under uncertainty.
    [Show full text]
  • GEORGE J. STIGLER Graduate School of Business, University of Chicago, 1101 East 58Th Street, Chicago, Ill
    THE PROCESS AND PROGRESS OF ECONOMICS Nobel Memorial Lecture, 8 December, 1982 by GEORGE J. STIGLER Graduate School of Business, University of Chicago, 1101 East 58th Street, Chicago, Ill. 60637, USA In the work on the economics of information which I began twenty some years ago, I started with an example: how does one find the seller of automobiles who is offering a given model at the lowest price? Does it pay to search more, the more frequently one purchases an automobile, and does it ever pay to search out a large number of potential sellers? The study of the search for trading partners and prices and qualities has now been deepened and widened by the work of scores of skilled economic theorists. I propose on this occasion to address the same kinds of questions to an entirely different market: the market for new ideas in economic science. Most economists enter this market in new ideas, let me emphasize, in order to obtain ideas and methods for the applications they are making of economics to the thousand problems with which they are occupied: these economists are not the suppliers of new ideas but only demanders. Their problem is comparable to that of the automobile buyer: to find a reliable vehicle. Indeed, they usually end up by buying a used, and therefore tested, idea. Those economists who seek to engage in research on the new ideas of the science - to refute or confirm or develop or displace them - are in a sense both buyers and sellers of new ideas. They seek to develop new ideas and persuade the science to accept them, but they also are following clues and promises and explorations in the current or preceding ideas of the science.
    [Show full text]
  • Antitrust: Discussion of Ideas Among Legislators and Who Has to Follow the Law
    1 ANTITRUST: DISCUSSION OF IDEAS AMONG LEGISLATORS AND WHO HAS TO FOLLOW THE LAW XVIe colloque Charles Gide. 14-16 abril 2016 Strasbourg, France Author: Ana Rosado. Complutense University of Madrid, Spain [email protected] Abstract The internalization of market transactions was the strategy of the majority of American companies at the end of the nineteenth century in order to increase the productivity and to reduce costs. Until 1880 the biggest American firms internalized suppliers and since 1890 included distribution, at the same time, the entrepreneurs amassed impressive fortunes. As a result the problem of trust became a moral issue, supported by the fact that society wealth has been transferred from customers to richest men. In this context a few debates took place among the American economists: first, a theoretical debate referred to prevention of monopolization of industry; second debate about the convenience of reform of the institutions and the origins of the FTC, and finally the control of economy by states. In this paper we tried to shade light about the economic arguments for and against to restrain the power of big American companies. Keywords: Antitrust, American History of Economic Thought, Markets Imperfections, Competition and Law. JEL code: B-21; K-21; D-43 2 I. INTRODUCTION At the end of the XIX century American firms shaped their structure into multidivisional companies and some of them became trusts. Many authors began to be worried about the size that these companies had reached; one of these authors was John Bates Clark. Indeed, he gave his name to the prelude price for the Nobel Prize for Economics.
    [Show full text]
  • United States Competition Policy in Crisis: 1890-1955 Herbert Hovenkamp
    University of Minnesota Law School Scholarship Repository Minnesota Law Review 2009 United States Competition Policy in Crisis: 1890-1955 Herbert Hovenkamp Follow this and additional works at: https://scholarship.law.umn.edu/mlr Part of the Law Commons Recommended Citation Hovenkamp, Herbert, "United States Competition Policy in Crisis: 1890-1955" (2009). Minnesota Law Review. 483. https://scholarship.law.umn.edu/mlr/483 This Article is brought to you for free and open access by the University of Minnesota Law School. It has been accepted for inclusion in Minnesota Law Review collection by an authorized administrator of the Scholarship Repository. For more information, please contact [email protected]. Article United States Competition Policy in Crisis: 1890-1955 Herbert Hovenkampt INTRODUCTION: HISTORICAL EXPLANATION AND THE MARGINALIST REVOLUTION The history of legal policy toward the economy in the United States has emphasized interest group clashes that led to regula- tory legislation.' This is also true of the history of competition policy. 2 Many historians see regulatory history as little more than a political process in which well-organized, dominant interest groups obtain political advantage and protect their particular in- dustry from competition, typically at the expense of consumers.3 t Ben V. & Dorothy Willie Professor, University of Iowa College of Law. Thanks to Christina Bohannan for commenting on a draft. Copyright 0 2009 by Herbert Hovenkamp. 1. See, e.g., WILLIAM J. NOVAK, THE PEOPLE'S WELFARE: LAW AND REGULA- TION IN NINETEENTH-CENTURY AMERICA 83-84 (1996); THE REGULATED ECONO- MY: A HISTORICAL APPROACH TO POLITICAL ECONOMY 12-22 (Claudia Goldin & Gary D.
    [Show full text]
  • PROFESSIONALIZING ECONOMICS: the 'Marginalist Revolution' in Historical Context Michael A. Bernstein Department of History 0
    PROFESSIONALIZING ECONOMICS: The ‘Marginalist Revolution’ in Historical Context Michael A. Bernstein Department of History 0104 University of California, San Diego 9500 Gilman Drive La Jolla, California 92093-0104 [USA] [Phone: 858-534-1070] [Fax: 858-534-7283] [[email protected]] 2 Economic analysis, serving for two centuries to win an understanding of the Nature and Causes of the Wealth of Nations, has been fobbed off with another bride -- a Theory of Value. There were no doubt deep-seated political reasons for the substitution but there was also a purely technical, intellectual reason. -- Joan Robinson [1956]i If the last years of the nineteenth century witnessed the first, genuine articulation of a professional self-consciousness among American economists, then they also demarcated the establishment of an altogether novel protocol for those experts. This new agenda, developed with increasing rigor and authority as the twentieth century beckoned, began a significant reorientation of the field's object of study while at the same time it reconfigured long-standing perceptions of the history of economic thought as a whole. Scientific sophistication necessarily involved a revision of practice, yet it also encouraged the articulation of new perceptions of its pedigree.ii Linking the object of study with particular and venerable authorities from the ages was of singular importance to the successful construction of a distinctly professional knowledge. Framing that understanding in a particular way was the result of both a social and an intellectual process. With their most apparent and seemingly immediate intellectual roots in the moral philosophy of the eighteenth and nineteenth centuries, modern economists were (and are) eager to invoke validation by impressive forebears and traditions.
    [Show full text]
  • Walton Hamilton, Amherst, and the Brookings
    WALTON HAMILTON, AMHERST, AND THE BROOKINGS GRADUATE SCHOOL: INSTITUTIONAL ECONOMICS AND EDUCATION. Malcolm Rutherford University of Victoria (This Draft September 2001) The research for this paper made extensive use of the Brookings Institution Archives, and the Walton Hamilton papers at the Tarlton Law Library at the University of Texas. I also benefited from access to the Archives of the War Labor Policies Board at the National Archives, College Park, Maryland; the Morris A Copeland and Carter Goodrich papers at the Rare Book and Manuscript Library, Columbia University; the Clarence Ayres papers at the Center for American History at the University of Texas; the H. C. Adams and I. Leo Sharfman papers at the Bentley Historical Library, University of Michigan; the Isador Lubin, Rexford Tugwell, and Mordecai Ezekiel papers at the Franklin D. Roosevelt Library, Hyde Park, New York, and the Archives of the Laura Spelman Rockefeller Memorial at the Rockefeller Archive Center, Sleepy Hollow, New York. My thanks also to the Amherst College Archives and Special Collections for information on course offerings, to my research assistant, Cristobal Young, for biographical research, and to Mark Perlman, Robert Whaples, Sherry Kasper, Roger Backhouse, and Julian Reiss for useful information and comments. Any errors are my responsibility. This research has been supported by a Social Sciences and Humanities Research Council of Canada Research Grant (project # 410-99-0465). 1 1. Introduction This paper is a small part of a larger project concerning the
    [Show full text]
  • “On a Level with Dentists”? Reflections on the Evolution of Industrial Organization
    "On a Level with Dentists?" Reflections on the Evolution of Industrial Organization The MIT Faculty has made this article openly available. Please share how this access benefits you. Your story matters. Citation Schmalensee, Richard. “‘On a Level with Dentists?’ Reflections on the Evolution of Industrial Organization.” Review of Industrial Organization 41.3 (2012): 157–179. As Published http://dx.doi.org/ 10.1007/s11151-012-9356-6 Publisher Springer-Verlag Version Author's final manuscript Citable link http://hdl.handle.net/1721.1/75827 Terms of Use Creative Commons Attribution-Noncommercial-Share Alike 3.0 Detailed Terms http://creativecommons.org/licenses/by-nc-sa/3.0/ June 2012 “On a level with dentists”? Reflections on the Evolution of Industrial Organization Richard Schmalensee∗ Massachusetts Institute of Technology 1. Introduction In 1930, writing about “Economic Possibilities for our Grandchildren,” Keynes (1930, p. 373) opined that “If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid!” In this essay I offer some observations on the evolution of industrial organization economics and consider at the end whether its practitioners have come to deserve to pass Keynes’ test. I use the word “evolution” rather than “progress” or “development” deliberately. Just as predator and prey evolve together in natural systems, and evolution there is about adaptation, not species-by-species improvement, so problems addressed and tools employed evolve together in intellectual fields. In fields of economics, methods of analysis are shaped over time both by developments in related fields – mutations, if you will – and in response to the changing problems with which the field is concerned.
    [Show full text]
  • Why Law, Economics, and Organization?
    29 Sep 2005 19:13 AR AR258-LS01-16.tex XMLPublishSM(2004/02/24) P1: KUV 10.1146/annurev.lawsocsci.1.031805.111122 Annu. Rev. Law Soc. Sci. 2005. 1:369–96 doi: 10.1146/annurev.lawsocsci.1.031805.111122 Copyright c 2005 by Annual Reviews. All rights reserved First published online as a Review in Advance on August 19, 2005 WHY LAW,ECONOMICS, AND ORGANIZATION? Oliver E. Williamson Walter A. Haas School of Business, University of California, Berkeley, California 94720; email: [email protected] KeyWords governance, transaction costs, law school teaching ■ Abstract This review shows that a combined law, economics, and organization theory approach leads to different and deeper understandings of the purposes served by complex contract and economic organization. The business firm for these purposes is described not in technological terms (as a production function) but in organizational terms (as an alternative mode of governance). Firm and market are thus examined comparatively with respect to their capacities to organize transactions, which differ in their complexity, so as to economize on transaction costs. The predictive theory of economic organization that results has numerous ramifications for public policy toward business and for teaching and research in the law schools. INTRODUCTION Whereas law and economics began as the application of economic reasoning to antitrust and regulation, it has since been expanded to bring economic analysis to bear (in varying degree) on every facet of the law school curriculum. Occasional dissents notwithstanding, law and economics is widely regarded as a success story. I concur with this favorable assessment but would observe that economic anal- ysis comes in more than one flavor.
    [Show full text]
  • A Century of Economic and Legal Thinking
    Journal of Economic Perspectives—Volume 14, Number 1—Winter 2000—Pages 43–60 Antitrust Policy: A Century of Economic and Legal Thinking William E. Kovacic and Carl Shapiro assage of the Sherman Act in the United States in 1890 set the stage for a century of jurisprudence regarding monopoly, cartels, and oligopoly. P Among American statutes that regulate commerce, the Sherman Act is unequaled in its generality. The Act outlawed “every contract, combination or conspiracy in restraint of trade” and “monopolization” and treated violations as crimes. By these open-ended commands, Congress gave federal judges extraordi- nary power to draw lines between acceptable cooperation and illegal collusion, between vigorous competition and unlawful monopolization. By enlisting the courts to elaborate the Sherman Act’s broad commands, Congress also gave economists a singular opportunity to shape competition policy. Because the statute’s vital terms directly implicated economic concepts, their interpretation inevitably would invite contributions from economists. What emerged is a convergence of economics and law without parallel in public oversight of business. As economic learning changed, the contours of antitrust doctrine and enforcement policy eventually would shift, as well.1 This article follows the evolution of thinking about competition since 1890 as 1 In State Oil Co. v. Khan (118 S. Ct. 275, 284 [1997]), the Supreme Court emphasized the trend in its previous antitrust decisions of recognizing and adapting to changed circumstances and lessons of accumulated experience. The degree of professional acceptance and empirical verification that eco- nomic theories must achieve before they are relied upon in the courtroom remains an issue of debate within the courts.
    [Show full text]
  • Nature and Essence of the Firm
    View metadata, citation and similar papers at core.ac.uk brought to you by CORE provided by Munich Personal RePEc Archive MPRA Munich Personal RePEc Archive The (new) nature and essence of the firm Christos Pitelis and David Teece 2009 Online at https://mpra.ub.uni-muenchen.de/24317/ MPRA Paper No. 24317, posted 11. August 2010 11:04 UTC The (New) Nature and Essence of the Firm Christos N. Pitelis Director, Centre for International Business and Management (CIBAM), Judge Business School, University of Cambridge, Trumpington Street, Cambridge, CB2 1AG, UK, Tel: +44 (0) 1223 339619, Fax: +44 (0) 1223 766815, Email: [email protected] and David J. Teece Institute of Management, Innovation and Organization Haas School of Business University of California, Berkeley Berkeley, CA, 94720 Tel: +1 (510) 642-1075, Fax: +1 (510) 642-2826 Email: [email protected] DRAFT – NOT TO BE QUOTED January 20, 2009 We are grateful to Editors Alfonso Gambardella and Maurizio Zollo and an anonymous reviewer for encouragement and useful comments. Errors are ours. 1 Abstract Extant explanations of the nature and scope of firms, such as transaction costs, property rights, metering and “resources” can be integrated into a more general (capability based) theory of the nature and essence of the firm that recognizes the importance to the firm of creating (and capturing) value from innovation. We note that the appropriability of returns from creative and innovative activity often requires the entrepreneurial creation and co-creation of markets. Accordingly, market failure and transaction costs approaches need to be revamped to capture the essence of entrepreneurial and managerial activity that extends beyond the mere exercise of authority.
    [Show full text]