The Firm as a Pool of Factor Complementarities

16 Pages Posted: 5 Mar 2004

See all articles by Assar Lindbeck

Assar Lindbeck

; CESifo (Center for Economic Studies and Ifo Institute); Research Institute of Industrial Economics (IFN)

Dennis J. Snower

University of Kiel - Institute for World Economics (IfW); Institute for the Study of Labor (IZA); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute)

Multiple version iconThere are 2 versions of this paper

Date Written: February 2004

Abstract

This Paper presents a new approach to the theory of the firm by identifying factor complementarities as central to the determination of the firm's boundaries. The factor complementarities may take a variety of forms: technological and informational complementarities, as well as economies of scale and scope. We examine the trade-off between the gains from these complementarities and transactions costs. In so doing, we must abandon the standard dichotomy between the determinants of plant size and firm size. The influence of factor complementarities on firm size is examined in partial and general equilibrium frameworks.

Keywords: Economies of scale and scope, firm, transaction costs, factor complementarities

JEL Classification: D21, D23

Suggested Citation

Lindbeck, Assar and Snower, Dennis J., The Firm as a Pool of Factor Complementarities (February 2004). CEPR Discussion Paper No. 4242. Available at SSRN: https://ssrn.com/abstract=511381

Assar Lindbeck

( email )

Stockholm, SE-10691
Sweden
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CESifo (Center for Economic Studies and Ifo Institute)

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Research Institute of Industrial Economics (IFN) ( email )

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HOME PAGE: http://www.ifn.se/assarl

Dennis J. Snower (Contact Author)

University of Kiel - Institute for World Economics (IfW) ( email )

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Germany
+49+431-8814-235 (Phone)

Institute for the Study of Labor (IZA)

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Germany

Centre for Economic Policy Research (CEPR)

London
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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