The Firm as a Pool of Factor Complementarities

Lindbeck, Assar; Snower, Dennis J.

doi:10.2139/ssrn.455800

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The Firm as a Pool of Factor Complementarities

16 Pages Posted: 20 Oct 2003

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)

There are 2 versions of this paper

Date Written: October 2003

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 tradeoff 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.

JEL Classification: D23, J24, J31, J51, J53

Suggested Citation: Suggested Citation

Lindbeck, Assar and Snower, Dennis J., The Firm as a Pool of Factor Complementarities (October 2003). Available at SSRN: https://ssrn.com/abstract=455800 or http://dx.doi.org/10.2139/ssrn.455800