Encyclopedia of Law and Economics

2019 Edition
| Editors: Alain Marciano, Giovanni Battista Ramello


  • Mehmet BacEmail author
Reference work entry
DOI: https://doi.org/10.1007/978-1-4614-7753-2_358


Organizations exist because they cost-effectively coordinate and provide incentives relative to alternative modes of transacting. The article exposes some of the main economic explanations for why organization emerges, what it does and how its scale and scope are determined, highlighting the role of a hierarchical command structure in aligning the members’ objectives with those of the organization and successfully overcoming problems of asymmetric information and collusion.

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© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Sabanci UniversityIstanbulTurkey