Market Microstructure: Middlemen Organizations and Firm Theory: Middlemen Organizations and Firm Theory

Author: Daniel F. Spulber
Publisher:
Publication Date: 2002-10-01
Features: Frontier of Economic Science Translation Series. Since Professor Coase published the classic paper "The Nature of the Firm" in 1937, it has been frequently cited by later scholars, naturally because later scholars did not surpass the problems Coase raised, rather than not surpassing Coase's theory. The author of this book, Professor Spulber, proposes a theory of the firm that understands the economic role of the firm as an intermediary between customers and suppliers. He systematically argues why firms exist in a market equilibrium with transaction costs, and thereby explains how the intermediary theory of the firm accounts for the emergence of firms. His new work provides a clear exposition of the literature on these issues. Moreover, Spulber's theory helps explain how markets operate by demonstrating how firms choose market-clearing prices. Specifically, he starts from the intermediary models established in microeconomics and finance, as well as the microstructure models of markets, to delve into the formation of firms and the activities of market-making. This book also compares the intermediary theory of the firm with existing theories of the firm, including neoclassical, industrial organization, transaction cost, and principal-agent models, and offers a new and rich theoretical analysis of the role firms play in the market.