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Firms as clubs in Walrasian markets with private information Author info | Abstract | Publisher info | Download info | Related research | Statistics Edward S. Prescott
Robert M. Townsend
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Using private information and club theories, this paper develops a theory of firms in general equilibrium. Firms are defined to be assignments of technologies and agents to clubs. In equilibrium, firms form endogenously and multiple types may co-exist. We formulate the general equilibrium problem as both a Pareto program and as a competitive equilibrium. Welfare and existence theorems are provided. In the competitive equilibrium, club memberships are priced and purchased, so the market determines which organizations exist as well as who is a member. Pareto optima and competitive equilibria of several examples are computed. In our examples, elements of limited commitment and monitoring capabilities are important factors that affect both the internal organization of firms and their equilibrium distribution. Furthermore, equilibrium organizational structure varies with the aggregate endowment of capital and the distribution of wealth.
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Paper provided by Federal Reserve Bank of Richmond in its series Working Paper with number
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Date of creation: 2000Date of revision:
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Keywords: Theory of the firm ; Equilibrium (Economics) ; Other versions of this item:
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references Cited by : (explanations , Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile , click on "citations" and make appropriate adjustments.)
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02-07, Cornell University, Center for Analytic Economics.
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Other versions: Edward Simpson Prescott & Robert M. Townsend, 2005.
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Joao Correia-da-Silva & Carlos Herves-Beloso, 2008.
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Other versions: repec:bep:thetop:v:8:y:2008:i:1:p:1385-1385 is not listed on IDEAS
Other versions: CITANNA, Alessandro & CHAKRABORTY, Archishman, 2002.
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Les Cahiers de Recherche
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