The Austrian Theory of Firm Seminar lead by the economist and professor Peter Klein is a group discussion of the benefits and costs of firms, their role in markets and the perspectives of different authors about this type of organization in free markets.
In this fifth session, professor Klein talks about the applications of the previously discussed Theory of the Firm in the fields of law, regulations, business strategy and entrepreneurship. He presents the Ronald Coase’s work on vertically integration and Oliver Williamson’s work on ways to protect firm's’ relationships with specific investments of assets.
A lot of vertically contractual restraints, the restrictions that large retailers would impose to their suppliers for example, actually serve an efficiency purpose [...], vertically integration in the Coase-Williamson perspective, serves as a mean of protecting relationships of specific investments”.
Prior to Williamson, antitrust analysis began with the model of perfect competition. Klein discusses why opting for these kind of restrictions actually deviates from the real world. Also, he talks about the firm's organization and its boundaries.
Understanding that firms serve a role in reducing transaction costs, understanding that vertically integration can reduce hold-up problems that arise from investments in specific capital makes us think ‘maybe those arrangements are okay’.”
Lastly, Klein analyzes his own article on Entrepreneurship and Innovation based on the Austrian Capital Theory from Israel Kirzner where he examines assets specificity, property rights and the boards of directors within a firm.
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Economist, professor and researcher
Nuestra misión es la enseñanza y difusión de los principios éticos, jurídicos y económicos de una sociedad de personas libres y responsables.
Universidad Francisco Marroquín