Abstract
The Standard theory of production and exchange has provided fundamental insights into social problems that find their source in scarcity. It has demonstrated that, in a competitive equilibrium, the extent of exchange is consistent with the equimarginal principle. The theory has suggested testable implications for a number of world events and, most significantly, explained the efficiency characteristics of competitive markets.
Reprinted, with some changes, by permission of the author and from Schweizerische Zeitschrift für Volkswirtschaft und Statistik, 1976, no. 1, pp. 1–25. An earlier draft of the paper presented at the Second Annual Interlaken Seminar on Analysis and Ideology, Switzerland.
The writing of this paper was facilitated by grants from the Center for Research in Government Policy and Business, the University of Rochester; the National Science Foundation; and the Earhart Foundation.
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Notes
S. Cheung, “The Structure of a Contract and the Theory of a Non-exclusive Resource,” Journal of Law and Economics 13 (1970): 64.
A. Alchian, “The Basis of Some Recent Advances in the Theory of Management of the Firm,” Journal of Industrial Economics 14 (1965): 30–41.
E. Furubotn and S. Pejovich, “Property Rights and Economic Theory,” Journal of Economic Literature 10 (1972): 1137–1162.
S. Gordon, “The Economie Theory and a Common Property Resource: Fishery,” Journal of Political Economy 62 (1970): 124–142.
A. Bottomley, “The Effect of the Common Ownership of Land upon Resource Allocation in Tripolitania,” Land Economics 39 (1963): 91–95.
S. MacCaulay, “Non-contractual Relations in Business: A Preliminary Study,” American Sociological Review 28 (1963): 56–67.
For detailed discussion, see S. Pejovich, “Towards an Economic Theory of the Creation and Specification of Property Rights,” Review of Social Economy 30 (1972): 309–325.
See an excellent paper by A. Alchian and H. Demsetz, “Production, Information Costs, and Economic Organization,” American Economic Review 62 (1972): 777–795.
A. Alchian, “Corporate Management and Property Rights,” in Economic Policy and the Regulation of Corporate Securities, ed. H. Manne (Washington, D.C.: American Enterprise Institute, 1969). An excellent paper on the subject of the firm’s behavior is M.Jensen and W. Meckling, “Theory of the Firm: Managerial Behavior, Agency Costs, and Ownership Structure,” Journal of Financial Economics 3 (1976): 305-360, reprinted in this volume, pp. 163-231.
F. Pryor, Property and Industrial Organization in Communist and Capitalist Nations (Bloomington: Indiana University Press, 1973), chap. 7.
For detailed analysis, see E. Furubotn and S. Pejovich, “Property Rights and the Behavior of the Firm in a Socialist State,” Zeitschrift für Nationalökonomie 30 (1970): 431–454.
S. Pejovich, “The Firm, Monetary Policy and Property Rights in a Planned Economy,” Western Economic Journal 7 (1969): 193–200.
S. Pejovich, “The Banking System and the Investment Behavior of the Yugoslav Firm,” in Plan and Market, ed. M. Bornstein (New Haven, Conn.: Yale University Press, 1973).
F. Lutz and V. Lutz, The Theory of Investment of the Firm (Princeton, N.J.: Princeton University Press, 1951), p. 161.
W. Baumol, “The Transactions Demand for Cash: An Inventory Theoretical Approach,” Quarterly Journal of Economics 66 (1952): 545–556.
E. Furubotn and S. Pejovich, “ Property Rights, Economic Decentralization, and the Evolution of the Yugoslav Firm, 1965–1972,” Journal of Law and Economics 16 (1973): 275–302.
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© 1979 University of Rochester Center for Research in Government Policy and Business
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Pejovich, S. (1979). The Capitalist Corporation and the Socialist Firm. In: Brunner, K. (eds) Economics Social Institutions. Rochester Studies in Economics and Policy Issues, vol 1. Springer, Dordrecht. https://doi.org/10.1007/978-94-009-9257-3_7
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