The Times and the Theory

  • Colin Read
Part of the Great Minds in Finance book series (GMF)


In 1937, Ronald Coase, then a young 27-year-old lecturer at the London School of Economics, had posed a provocative puzzle. When should a firm outsource an intermediate factor of production, and when should it produce the good or service in-house? This relatively simple question spawned the first academically rigorous explanation for the modern corporation and provided a theoretical explanation for the valuation of a corporation that is in excess of its book value of assets.


Corporate Governance Transaction Cost Vertical Integration Transaction Cost Economic Neoclassical Model 
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  1. 1.
    Oliver Williamson, “The Vertical Integration of Production: Market Failure Considerations”, The American Economic Review, Vol. 61, No. 2, Papers and Proceedings of the Eighty-Third Annual Meeting of the American Economic Association, May, 1971, pp. 112–23.Google Scholar
  2. 2.
    Oliver Williamson, Markets and Hierarchies: Analysis and Antitrust Implications, New York: Free Press, 1975.Google Scholar
  3. 3.
    Oliver Williamson, “Transaction-Cost Economics: The Governance of Contractual Relations,” Journal of Law and Economics, 22(2), 1979, pp. 233–61.CrossRefGoogle Scholar

Copyright information

© Colin Read 2015

Authors and Affiliations

  • Colin Read
    • 1
  1. 1.SUNY CollegePlattsburghUSA

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