1. Substantively rational. Selfish. Preferences don't change. Knightian risk.
2. Less micro-analytic. Decisions are black boxed.
3. Commodities and prices as units of analysis. Equilibrium. Paths reversable.
4. Widgets will do to describe goods. Emphasis on scarcity of IUG. Assume dominance of negative feedback and decreasing returns.
5. Business firm is a production function.
6. Ex ante (complete) contracts.
7. Emphasis on prediction, but can't explain choice of market or hierarchy.
8. Firms will be monopolists if allowed. If there is a key proposition it is that private markets are the best of all possible worlds. Collective action is suspect. Price is sufficient information.
9. Factors of production; Land, labor and capital. Each gets what it produces. No power..
10. Institutions are exogenous.
11. Institutions as constraints. Modeled as price effects.
12. Performance measures: Efficiency is unique.
13. Uncertainty treated as subjective probability. People have preferences for risk like any good.
Williamson: TRANSACTION COSTS ANALYSIS
1. Bounded rationality, but can calculate economical organization form. Opportunism with guile.
2. More micro-analytic. Firm is nexus of contracts or is a hierarchy.
3. Transaction as unit of analysis, but specific to bilateral trade. Equilibrium
4. Asset specificity and guile are prime sources of interdependence.
5. Business firm is governance structure. Focus is on governance (rather than measurement).
6. Emphasis on private ordering. Continuing negotiation of incomplete contracts.
7. Large number of refutable implications.
8. Key proposition: Organizational variety arises primarily to achieve transaction cost economizing.
9. No class interests. Everyone gains if friction is reduced. No power.
10. Predicts choice of organization if given situation is present.
Given the situation, there is an institution which fits, i.e. economizes.
11. Institutions can reduce transaction cost.
12. Private governance will find efficiency if left alone.
13. Uncertainty means contracts are necessarily incomplete.
1. Procedural rationality. Habits, passions, and altruism/opportunism. Interdependence even if no guile. Preferences continually learned and influenced by others and law sometimes.
2. Micro-mico, micro, and macro. Firm has loose, evolving boundaries. Negotiation, command & loyalty.
3. Transaction as unit of analysis. Reciprocal relationship between A's opportunity and B's exposure and limit. Multilateral transactions. Disequilibrium. Path dependence.
4. IUG, EC, IC/Tr.C, JIG, Surpluses, etc. Interdependence even w/o intent and guile. Increasing returns.
5. Business firm is governance structure embedded in other institutions, with economizing and power dimensions. Considers both governance and measurement. Organizations influence inst. change.
6. Private, court, legislative and cultural ordering.
7. Larger number of refutable propositions. Emphasis on explantation.
8. No simple summary proposition. People use any government to enlarge their opportunity set (power play). Neither organizational variety nor factor ownership (including degree of competition) directs all sources of interdependence. Institutional choice is necessarily a moral choice.
9. When interests conflict, rights determine whose preferences count. Capacity and rights matter.
10. Predict who gets what if given situation is present and a particular structure is chosen. What gets chosen is matter of rules for making rules as well as economizing within a set of rules.
11. Institutions as constraints and enablement and preference influencing. Modeled as price and wealth effects.
12. Which and whose efficiency? Efficiency l vs. Efficiency 2. People as product.
13. Uncertainty: radical subjectivity.
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