Firms: What is WITH you?

References

Why do firms exist, not just single agents? Why do they exhibit a Zipf(ish) distribution? Why isn’t there (yet) a single monopoly owning the entire economy? Why are they structured like they are? How is that, anyway?

Kevin Bryan on Jean Tirole

Since the only part of the indescribable state I care about is the part that affects my payoffs, we are essentially done: no matter how many v and c’s there could be in the future, as long as I can write a contract specifying how we each get other to truthfully say what those parameters are, this indescribability doesn’t matter.

Whoa. That is a very, very, very clever insight. Frankly, it is convincing enough that the only role left for property rights theories of the firm are some kind of behavioral theory which restricts even contracts of the Maskin-Tirole sense — and since these contracts are quite a bit simpler in some way than the hundreds of pages of legalese which we see in a lot of real-world contracts on important issues, it’s not clear that bounded rationality or similar theories will get us far.

I cannot help but feel that Keith Devlin’s History of double entry book keeping pertains in some way.

References

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Axtell, Robert. 2006. “Firm Sizes: Facts, Formulae and Fantasies.”

Borondo, J., F. Borondo, C. Rodriguez-Sickert, and C. A. Hidalgo. 2014. “To Each According to Its Degree: The Meritocracy and Topocracy of Embedded Markets.” Scientific Reports 4 (January). https://doi.org/10.1038/srep03784.

Clauset, Aaron, Cosma Rohilla Shalizi, and Mark E J Newman. 2009. “Power-Law Distributions in Empirical Data.” SIAM Review 51 (4): 661. https://doi.org/10.1137/070710111.

Goddard, John, Hong Liu, Donal G. McKillop, and John O. S. Wilson. 2012. “On the Size Distribution of Financial Institutions.” SSRN Scholarly Paper ID 1940220. Rochester, NY: Social Science Research Network. http://papers.ssrn.com/abstract=1940220.

Gonza, Tej, and David Ellerman. 2019. “Worker Ownership and the Current Crisis.” In Sukobi.stabilnost.demokratija? http://www.ellerman.org/wp-content/uploads/2020/03/WorkerOwnershipAndCurrentCrisis.pdf.

Jackall, Robert. 2009. Moral Mazes: The World of Corporate Managers. Updated edition. Oxford ; New York: Oxford University Press.

Malevergne, Y., A. Saichev, and D. Sornette. 2010. “Zipf’s Law and Maximum Sustainable Growth.” December 1, 2010. http://arxiv.org/abs/1012.0199.

Malevergne, Yannick, Alexander I. Saichev, and Didier Sornette. 2008. “Zipf’s Law for Firms: Relevance of Birth and Death Processes.” SSRN Scholarly Paper ID 1083962. Rochester, NY: Social Science Research Network. http://papers.ssrn.com/abstract=1083962.

Palladino, Lenore. 2019. “RIP Shareholder Primacy.” Text. Boston Review. August 21, 2019. http://bostonreview.net/class-inequality/lenore-palladino-rip-shareholder-primacy.

Saichev, A., Y. Malevergne, and D. Sornette. 2008. “Theory of Zipf’s Law and of General Power Law Distributions with Gibrat’s Law of Proportional Growth.” August 13, 2008. http://arxiv.org/abs/0808.1828.

Saichev, Alexander I., Yannick Malevergne, and Didier Sornette. 2010. Theory of Zipf’s Law and Beyond. http://www.springer.com/economics/financial+economics/book/978-3-642-02945-5.

Simon, Herbert A. 1955. “On a Class of Skew Distribution Functions.” Biometrika 42 (3-4): 425–40. https://doi.org/10.1093/biomet/42.3-4.425.

———. 1960. “Some Further Notes on a Class of Skew Distribution Functions.” Information and Control 3 (1): 80–88. https://doi.org/10.1016/S0019-9958(60)90302-8.

Simon, Herbert A, and Charles P Bonini. 1958. “The Size Distribution of Business Firms.” The American Economic Review 48 (4): 607–17. http://www.jstor.org/stable/1808270.

Wilson, James T., Viacheslav Borovitskiy, Alexander Terenin, Peter Mostowsky, and Marc Peter Deisenroth. 2020. “Efficiently Sampling Functions from Gaussian Process Posteriors.” July 1, 2020. http://arxiv.org/abs/2002.09309.

Yanagita, T, and T Onozaki. 2008. “Dynamics of a Market with Heterogeneous Learning Agents.” Journal of Economic Interaction and Coordination 3 (1): 107–18. https://doi.org/10.1007/s11403-008-0038-2.

Zingales, Luigi. 2017. “Towards a Political Theory of the Firm.” Journal of Economic Perspectives 31 (3): 113–30. https://doi.org/10.1257/jep.31.3.113.

Firms: What is WITH you?

References

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