Armen Alchian and Harold Demsetz argue that this theoretical construct is a way to deal with metering costs and relies on the residual income of a monitor to be effective. Benjamin Klein used the example of Fischer Body to show how this construct helped solve the hold-up pro
Armen Alchian and Harold Demsetz argue that this theoretical construct is a way to deal with metering costs and relies on the residual income of a monitor to be effective. Benjamin Klein used the example of Fischer Body to show how this construct helped solve the hold-up problem and naturally led to vertical integration. Oliver Williamson described the principal-agent problem facing these constructs and believed that these constructs would be limited by delegation and the decreasing incentive returns of additional residual income. Another paper suggests measuring the size of these entities by looking at the number of internal and external relations, and explains why they have emerged in the place of independently acting entrepreneurs. For 10 points, minimizing transaction costs is the primary purpose proposed by Ronald Coase in his 1937 work on "The Nature of" what basic business entity?
Armen Alchian and Harold Demsetz argue that this theoretical construct is a way to deal with metering costs and relies on the residual income of a monitor to be effective.
{firms}