Asymmetric Information and Market Disequilibrium - Essay Example

? Asymmetric information and market disequilibrium Asymmetric information can result in markets leading to sub-optimal equilibria. (a) Show how this can lead to the complete absence of trade, even in the presence of willing buyers and willing sellers. In the domain of perfectly competitive market, one of the basic assumptions is that the buyers and the sellers have the perfect information about the market. But in reality the pool of information knowledge varies with certain degrees among the agents of the markets i.e., among the buyers and the sellers leading to market distortions or attainment of disequilibria (Economics of organization, slide 3, 5) This has been a broad domain of study for the economists where market distortions occur as a result of asymmetry in information among the buyers and the sellers although they are willing eagerly for performing transactions in the market. Evidences state that asymmetric information has resulted in adverse selection and under provision or lack of trade (Cawley & Philipson, 1999, p.827). In the real markets cases often arise when the seller knows more about the product being traded than the buyers. As for example in case of second hand car market, the seller knows more about the car than the buyer. It may be the other way round also where the buyer posses more information than the sellers as for example in insurance market, the buyers of the insurance usually is more aware about their risks than the insurance company selling them the insurance. Labor market can be considered as another case where a labor trying to get a job is more aware of the fact that how able he is or she in convincing the employer to bag the job (Economics of organization, slide 4-6). The market of used car will be used as a model where the asymmetric information leads to the absence of trade in that market. The prediction of the conditions for the used cars is very hard to estimate. Various parameters to judge the conditions may be appearance of the car, existence of otherwise of a guarantee with the car, date of manufacturing and so on. But here the assumption will be that the buyer has only two sets of expectations or information in his mind that is the car is either good or the car is bad. The potential buyer also does not have the determination power of the condition of the car in ex ante situation (Economics of organization, slide 6). The seller is well informed about the condition of the car. If the car is in bad condition, the seller does not have the incentive to reveal the fact (Asymmetric Information, n.d). The willingness of the seller to sell a product is expressed in terms of reservation price. The reservation price of the seller is the price that the seller would accept for the object (Adverse Selection, n.d., p. 1) and it depends obviously on whether the car is good or bad. The reservation price of the seller is provided in the table below: Reservation Price Good condition Bad Condition $ 10, 000 6,000 Table 1. Similarly the buyers also evaluate the condition of the car which is also their reservation price (Onuma, n.d., p. 3). Now common information available to everyone is that half the sellers are selling good cars and half the sellers are selling bad cars. The reservation price of the buyer is provided in the table below: Reservation Price Good condition Bad Condition $ 11,000 7,000 Conjecture of the buyer In case of a risk neutral buyer the maximum amount he or she willing to pay for a used car is given in the expectation calculation of the buyer as given by, , Where E (B) = Expected buying price & probability of half of the sellers selling bad cars= probability of half of the sellers selling good cars= Now if the buyer gets to know about the reservation price of the seller, then he or she will work out the price calculation and will accordingly find that at the price only the seller of the bad car will be willing to sell the car because the sellers of only bad car’s reservation price is above $ 9,000 and the seller of the good cars’ reservation price is below $ 9,000. Thus in this case the buyer finds out that only the bad cars will be sold and the buyer will be willing to buy the bad car only at the rate of $ 7,000. Thus the car will be sold at a price between $6, 000, and $ 7,000 and no good car will be traded. Thus the absence of market for the good cars gets highlighted and the reason behind it is the notion of asymmetric information (Asymmetric Information, n.d). A graphical exposition further will make the picture clearer. Now a natural assumption is made that the reservation price of the seller increases with the quality and hence the supply is an increasing function of price and also the average quality of the goods on offer increases as the prices increases. Thus this simultaneous two fold effect on the supply will also have a dual effect on the demand as well. The first effect is the usual inverse relation between price and the quantity and the second effect is the quality effect where with the rise in price the average quality increases and the demand as well. These two impacts will oppose one another and the final outcome depends upon the comparative potency of the two effects. The demand curve will look the following: Fig.1 THE DEMAND CURVE The demand function for the first part of the demand curve will be and for the later part the demand function will be an inverse function of price i.e., .The supply curve will be a rising function of quantity i.e., . The demand supply interaction and the market equilibrium in shown in the figure below: Fig.2 THE MARKET EQUILIBRIUM In the above diagram, the market equilibrium is attained at the point where the demand curve D and supply curve S interacts and their corresponding interaction takes place at the point E. Now if the demand curve must be such that the adverse price effect exceeds the quality effect soon then a situation will arise where there will be no interaction with the demand and the supply and hence no trade will occur in that situation (Asymmetric Information, n.d). The case is diagrammatically represented below. Fig. 3 THE CASE OF MARKET FAILURE In the above diagram, there is no interaction of the demand and the supply curve and the market equilibrium is not attained and thus leading to market failure (Economics of organization Slide 4-6, Adverse selection, Slide 1). (b) Considering both ex ante and ex post cases, give examples of strategies that agents can employ to induce counter-parties to reveal idiosyncratic information. Asymmetric information often leads to market problems and suboptimal market equilibria. The problems which arise are basically known as adverse selection and moral hazard problem. Adverse selection occurs in a market where the buyers and the sellers on average are better off on trading with someone selected at random from the population than with those who volunteer to trade. Insurance market is an example of a market where the concept of adverse selection is highly applicable (Adverse selection, slide 1, 2). The insurance companies have a tendency to have fewer customers who are most likely to want insurance and face the highest risk. As for example people who are eager to buy collision insurance for their cars are likely to be driving a lot and are most likely to encounter accidents. Insurance companies are well aware that their customers will, on average, be worse insurance risks than a randomly-selected member of the population and accordingly, instead of basing their estimates of the risks they face on statistics for the population as a whole, they base them on statistics for insured people in previous years (Adverse Selection, n.d., p.5). Moral hazard is another problem which occurs from the asymmetric information paradigm. As for example people who have fire insurance will be less interested in preventing fire than the people who do not have fire insurances. People with unemployment insurance will be less inclined to work or search job, people whose work is not monitored in their workplace are most likely to shirk. This notion already comes from the underlying mechanism that the labor supply curve is backward bending and leisure is preferred to labor by a rational human being (Adverse Selection, n.d., p. 6). Another example can be cited is that of accounting information which are idiosyncratic by nature and their quality are often influenced by economy-wide factors such as accounting standards. In big corporate houses the corporate insiders possess private information which helps them to satisfy their own interests at the cost of the investors who provide funds to these firms. In order to protect themselves the investors make it more expensive to make the activity operations of the firms ex ante (Adverse Selection, Slide 2). The firms in order to tackle this problem, the solution are to commit at the time of financing to provide investors with information about its future activities (Gao & Verrecchia, 2011, p.1). Policy induction by the agents for revealing idiosyncratic information Signaling The market of the used car can again be brought again into the analysis for our purpose. In the market of used cars if the buyers can guarantee from the seller that if the car damages or cracks recently after purchasing without the buyers fault and the sellers will be liable to guarantee the cost of replacing it then the problem of adverse selection can be mitigated to a certain extent. An assumption is made that the good car almost never cracks. The good car seller can signal and guarantee the quality of the car and entrusting that he will pay the free repairs if the car gets cracked. Now the bad car sellers are informed that their car is likely to get crack and cannot guarantee free repairs. As a result a clear distinction between the good car sellers and the buyers can be made and the buyers will be well assured that the car which comes with a guarantee is a good car. This principle is known as the ‘costly-to-fake principle’ (Williamson’s t-cost, Slide 4 & Williamson revisited, Slide 16). Suppose the good car cracks with the probability of 20% and while the bad car cracks with the probability of 80%. Another assumption is made that the sellers are risk neutral. A signaling guarantee is made from the seller that if the car cracks down then it will be paid by the seller. Let the cost of the new car be $ 30,000. The old car seller also brings the car into the market with a disguise of new car seller and claims his car to be new also. The new car owner can sell his car at a minimum rate of $ 36,000. The probability of his car breaking down is 20%. Even if his car breaks down he can sell his car at the rate of $ 36,000. This follows from the given calculation as follows: Thus it can be seen from the above calculation, that the new car seller can retain a profit margin along with offering a guarantee of repairing to the buyer. Now suppose the old car cost the seller an amount of $ 10,000. Now, if the old car seller follows the policy of the new car seller and tries to sell the car at the rate of $ 36, 000 then his expected loss will be running in a negative direction. The calculation can be shown below as: Therefore this strategy will not be afforded by the old car seller. It is known that the buyers valuation of a good car is $ 30, 000. So the trade of the good cars occurs in this case. This is guaranteed by the non negative expected pay off the new car seller and the negative pay-off by the old car seller. Thus the signaling model works to make the bad car seller pessimistic about selling the bad car in the disguise of the new car. Further it is also seen that if the bad car seller mimic the good car sellers signaling procedure then that signaling procedure will be totally meaningless (Onuma, n.d., p .4). 2. How can Argyres (1996) be used to shed light on different explanations of the make-or-buy decision A solid fundamental question for the firms is to choose the activities which are performed in house and which activities to contract for externally. The firms usually manage such activities in order to minimize the transaction costs especially by achieving discriminating alignment between the make or buy decision and transaction characteristics. Empirics states that the firms are often in the spree of achieving a predicted alignment in their make-or-buy decisions with a notion of improving the transaction and organizational performance (Bidwell, 2009, p.1). Research in transaction cost economics and the capabilities-based view of the firm views the firm from three sets of changes that take place in place of the transactions being outsourced. Firstly the change is the loss of authority. The managers bear a considerable amount of authority over the internal transactions of the firms which are based on their ability to control the firm’s assets as well as possess the legal right to direct the employees (Vertical and quasi integration, slide-5). Whenever a project is outsourced, the managers lose these sources of authority and rely on the contracts for governance. The second change concerns the incentives and administrative controls used to regulate these transactions. The incentives tend to be much stronger in the markets than in the firms and often the activities are rewarded. Weaker incentives are found within the firms which are balanced by the stronger administrative controls, which define what the employees can do and what the employees cannot do. Thirdly, a change appears when “transactions are outsourced is that firms gain access to capabilities that are different from those present in the firm (Argyres 1996)”. For a given cost or quality, the firms often differ in their ability of producing varied kinds of products and services as because the complexity of coordinating organizational activities makes the learning process a slow process (Capabilities Approach, Slide 1). The outsourcing permits the firms to access to other organizations’ capabilities which may be better coordinated with a given transaction (Bidwell, n.d., p. 3). Transaction cost economics (TCE) describes how the governance structure of a given transaction can be formulated as a function of the relative costs of trading in markets and also leads to the organization of the procurement within the firm (Williamson, 1979, p.245).The theory primarily focuses on the contract as the parameter of analysis and supposes that characteristics of a given transaction, especially ex post hold-up hazards due to bilateral dependence. This generates a theory of the firm based on the merits (costs) of the internal production compared to the market procurement. Empirics have signified that there exist relations between transaction characteristics and governance decisions and also helps in the enhancement of the firm’s performance. On the other hand the resource based view emphasizes on the resource based view (RBV) of the firm which emphasizes on the difference in the firm’s capabilities and chalks out the decisions to make or buy as the product of the firm capabilities relative to the competitors. Williamson recognized that the firm level divergences may influence governance decisions. Thus the amalgamation of the TCE and the RBV approaches consider the way in which the firm’s heterogeneity may influence the decisions of governance. The importance of capabilities in the making or the buying decisions depends on the level of transaction hazards in the marketplace. Through the eyes of the RBV approach, the governance decisions reflect both what the firms want and what the firms can gain from the market procurement. In an experiment of 240 investor-owned utility companies in 1990-2007, it was found that firms with strong institutional safeguards, previous contracting experiences and inferior firm production capabilities bought more electricity and produce less in order to mitigate the increase in the demand. It has been also found out that the institutional safeguards acts as substitute elements for the prior contracting experience and led to the increase in the influence of the production capabilities on governance decisions (Capabilities Approach, Slide 1 & Strategy, and structure, Slide 2, 3). The findings further suggested that heterogeneity among the firms is a vital factor in the implementation of the governance decisions and the capabilities and institutional environment of the firm further enhances the firm’s productivity (Fabrizio, 2011, pp. 1-2) . 3. What distinguishes Williamson’s M-form from other divisional structures? To what extent do Williamson’s requirements for the M-form place limitations on its widespread adoption? In the complex business environment of the modern era it is really a difficult job for the multiproduct firms in order to manage the diversities of their operations. Significant historical studies of Chandler’s on the historical study of American enterprise depicted that the development of the multidivisional (M-form) structure came out as a result of the tackling the problems of managing the growth and diversity within a centralized functional (U-form) structure (Williamson revisited , Slide 2-3, Strategy and structure, Slide 2-3) . Williamson in 1975 diagnosed Chandler’s work and inferred that the firms with large multi-product base posses stylized information-processing advantages over functional structures. In other words, the firms with functional structure would turn up in efficient outcomes (Hoskisson, 1987, p. 625). In the previous few years the transformation in business has been massive and the changes are more drastically encountered in leading companies of Europe. The highlight of transformation and reorganization has been mainly predominant in the German-speaking part of Europe. Much concentration was entailed on the managerial agenda rather than the transformation and reorganization of the business. The modern pioneer of the business have gone to explore the historical archives and focused on the path breaking work of Chandler and Williamson’s multidimensional structure (M-form). This is regarded as the most efficient organizational form for large and diversified companies (Raisch et al, 2005, p.2). This model is basically regarded as the most efficient multidivisional structure and is preferred organizational form for large organizations with a variety of products or market segments. The theme of the structure is that it depends on the allocation of operational decisions partially to the self-governing divisions and at the same time the strategic and financial control is situated at the headquarters. As a result of this the top management of the organization is refrained from the operational tasks and can entail their full managerial and business effort on the strategic management of the organization .Within the organization, the divisions compete with each other for the scarce resources and there generates an internal capital market. The efficiency benefit of this multi-structural model works through a strict regime of lesser transaction costs. The operational decisions are allocated in fragments and it minimizes the top management’s information and co-ordination requirements. On the other hand the central control simultaneously restricts the division heads’ opportunistic dealings (Raisch et al, 2005, p.3). According to Williamson, at least one alternative structure type has been identified as efficient under certain conditions that is the functional structure (or U-form). In small organizations basically there is limited product range and the functional structure allows a wide specialization and enables the benefits of economies of scale and the effects of learning. Clear responsibilities are defined accordingly with well designed hierarchical structure and specialization mechanism (Raisch et al, 2005, p.3). Apart from the discussed M-form and U-forms another type of divisional structure may be of some other types also. One of the significant among them is the holding structure or the H-form structure where within a central unit the autonomous divisions are kept together and central unit restricts itself to the financial control. But Williamson criticizes this form of divisional structure is basically weak in its operations and directions as the there is lack of implementation of strategic and operational expertise from the headquarters. He also states that against the heads of divisions, the top management is relatively powerless. Williamson states that all other possible mixtures described as the X-form results in negative effect on the company’s revenue generation and profit mechanism (Raisch et al, 2005, p.3). The modified form of the Williamson’s M-form model is the N- form model which is characterized as more appropriate structure with attributes concerning the temporary constellations of people, the significance of the grass root level personnel, lateral communication, catalytic and architectural role for top management aimed at focusing on the economies of depth and hierarchical (authority is determined by knowledge and structure with equal importance to the working force of an organization ) structure (Hedlund, 2007). The distinctive advantage of the M- form organizational structure is the flexibility of the experimentation procedure which allows different organizations to adopt and introduce more innovative policies and reform policies. In the organization where the M-form is implemented consists of self contained units where the complementary tasks are grouped together. In comparison, the U-form organization is disintegrated into specialized units where the similar tasks are grouped together (Qian, et al, 2003, pp. 1- 3). The synopsis of the structure of the various divisional forms discussed is shown in a tabular representation below: Structural Types Description Multidivisional (M- form) Divisional structure with comprehensible disintegration of strategic and operational tasks. Headquarters assumes strategic command and the divisions all the functional tasks. Holding (H- form) Divisional structure with robust autonomous control. Limitation of the headquarter to financial control. The divisions determine the strategic and operational decisions themselves Functional (U –form) Functional structure with centralized decision-making in strategic as well as in operational tasks. X- form Mixed form of two or more of the above-mentioned structural types with combination of several classification characteristics New (N- form) High degree of decentralization and horizontal structures with strategic and operational decision-making delegated to small local units. On its wide spread adoption the Williamsons M- form faces certain limitations. The M-form organizational structure suffers from less economies of scale as compared to the U-form structure (Qian et al, 2003, p.1). Adoption of the M-form organizational structure also reduces the rate of return for the firms that adopt vertical integration (Hoskisson, 1987). A fundamental issue in the organization theory relates to the question that whether it will be grouped by product/market or function. One of the ideas of the M-form was the division by product/market facilitating intra-unit coordination at the expense of scale and simultaneously utilizing economies of scale and scope through centralized functions. In the M-form the cooperation is characterized by vertical information and communication flows between the headquarters and divisions as well as within the divisions. The M-form cooperation draws upon a particular type of knowledge specialization mainly related to certain products and markets. The knowledge is integrated within each division to produce specific goods that serve designated markets. But there is no support for knowledge integration across divisions (Morris et al, 2011, p.209). The firms adapting the M-form can generate initial profits but with any imitable capability, the advantages could not be sustained. New structures evolved with the growth of markets both upstream and downstream as transaction costs of dealing with the suppliers and the customers for a firm with M- form structure increased. As for example, large regional supermarket chains often operated in territories that encircled several different regional offices within the Pepsi Bottling Group. But the existing M-form structure of the company gave no region wide authority over price making mechanism. Thus when faced with requests for promotion or special pricing deals by a large supermarket chain, the headquarters forced to engage themselves in the regional pricing and promotion decisions (Williamson’s t-cost –slide1, T-cost and internalization-slide slide 3-5 & Williamson revisited- Slide- 1-3). This damaged the growth speed of the company. Thus realization with greater regional coordination was felt for increasing the effectiveness (Boyes, 2011, p.79). 4. Critically compare any two of the following accounts of why firms may pay above-market wages: efficiency wages, gift exchange, organisational investment, contested exchange It is a fact that some firms may find it profitable to pay wages above the market clearing wage levels in order to reduce shirking, turnover reduction, increase in the size and the quality of the applicant pool, or exchange gifts against the workers productivity in order to increase their motivation levels (Fosu et al, 2009, p.367) . In this respect we will critically compare the efficiency wages and gift exchange. Efficiency wages The efficiency wage hypothesis runs in the same line of discussion where the managers of the firms identify the incentives for paying more wages than the market clearing wages in order to increase their productivity or efficiency. The rise in the labor productivity creates. This occurs in a market where there exists involuntary unemployment (Akerlof, 2002, p. 79). Gift exchange The modern economic hypothesis of the firm accentuates the position of labor as an exclusive issue of production. Economic gifts in forms of cash or kind increases the productivity of the laborers in the short run but it has been also found that that continued use of this process ultimately lead to the rise of wage rigidity and involuntary unemployment generation (Bellemare et al, 2007) Comparison Basically there are two types of jobs that are primary sector jobs and the secondary jobs. Generally the primary sector jobs are having low quit rate and good working conditions. While on the other hand the secondary sector jobs are more quit rates, liittle chance of promotion and appreciation. Good or satisfactory pay is the premise of the primary sector jobs and poor or bad pay is the premise of the secondary sector jobs. Thus a difference of pay in the good pay and the bad pay creates the excess of wages at the present market clearing wages. It has been empirically proved that the primary sector jobs are generally high paid and thus generates the theory of efficiency wage hypothesis. Bureaucracy is one of the hierarchical organizations where the officials follow their career path according to the organization’s promotion ladder. Among the firms there is a well defined division of labor and the officials execute an “impersonal discipline in the discretionary conduct of their own offices as well as in the exercise of commands from higher offices” (Akerlof, 2002, p. 79). Thus this impersonal discipline is the germination of the personal loyalty of the employees to the goals of bureaucracy. The significance of this gift exchange model is the importance of employee loyalty to the operation of the firm. Various studies conclude or rather inferred that in some typical organizations the superiors have limited control on their subordinates work activity. It has been long discussed question that cetaris paribus, do really the workers produce greater with greater pay? In an experiment of proofreading, some students were taken as subject of experiment. They were bifurcated into two groups. One group was told that they were not qualified but they will be paid the usual rate. The other group was also told that they were qualified and were paid the usual rate. Among these students those who were led to believe that they were overpaid, produced lesser errors when they were paid on a piece rate basis and more output when paid on hourly basis than those who were told that they were qualified and paid the market rate. The inference of the experiment concluded that there is no guarantee that the overpaid workers will produce more (shown in the next part) but it was sure that there is withdrawal of services by the workers who are led to believe that they are underpaid and it acted as a disincentive (Akerlof, 2002, p. 82). For the gift exchange model focus is entailed on a experiment conducted experiment was within a tree-planting ?rm operating in British Columbia, Canada. Workers in this ?rm were normally paid piece rates and their daily earnings were strictly proportional to the number of trees they plant. During the experiment the workers received a surprise bonus in addition to their regular piece rate and told that it was temporary. In order to measure reciprocal behavior the workers were told that extra money was available in the contract and that the firm had decided to distribute that money among them and they were unaware of their participation in the experiment (Bellemare et al, 2007, p.4). After the experiments were conducted the results showed that planters reciprocated to gift distribution mechanism by the firm by raising their productivity to a quite elevated level. But unfortunately that was a short run phenomenon. The over distribution of gifts increased their wealth kitty as well as raised their living standard. As a result this resulted in a drop in productivity and labor to leisure substitution effect was encountered. Thus it can be concluded that the efficiency wage hypothesis emerged out of the market and it can be regarded as a cause. On the other hand the gift exchange model can be said to have been the offspring of efficiency hypothesis producing actual results of productivity in the labor market. Thus it can be said to the effect (Bellemare et al, 2007, p.19; Williamson revisited Slide 18 & Peer groups and hierarchies, Slide 3-6) References For question 1 (a) Asymmetric Information, (n.d.), available at: http://www-users.york.ac.uk/~jdh1/micro%202/book/Ch34.pdf (accessed on May 29, 2012) Adverse Selection, (n.d.), available at: http://www.econ.ucsb.edu/~tedb/Courses/Ec100C/lemonsexperiment.pdf (accessed on May 29, 2012) Cawley, J. & Philipson , T. (1999), An Empirical Examination of Information Barriers to Trade in Insurance, The American Economic Review Vol. 89, No.4, available at: http://economics.sas.upenn.edu/~hfang/teaching/socialinsurance/readings/fudan_hsbc/cawley_philipson99.pdf (accessed on May 29, 2012) Onuma, T (n.d.), ECON 101 Handout, available at: https://mywebspace.wisc.edu/onuma/web/LN11.pdf (accessed on May 29, 2012) 1. Adverse selection (last week review)- lecture 2 (ppt) 2. Economics of organization – lecture1 1(ppt) For question 1 (b) Gao, P., Verrecchia, R. E., (2011), Economic Consequences of Idiosyncratic Information in Diversified Markets, available at: http://faculty.chicagobooth.edu/pingyang.gao/research/papers/Ro2.pdf (accessed on May 29, 2012) 1. Adverse selection (last week review)- lecture 2 (ppt) 2. Williamson’s t-cost – lecture 3 (ppt) 3. Williamson revisited– lecture 9 (ppt) For question 2 Bidwell, M. (2009), Problems Deciding: How the Structure of Make-or-Buy Decisions Leads to Transaction Misalignment, available at: https://mgmt.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=4058 (accessed on May 29, 2012) Bidwell, M, (n.d.), POLITICS AND FIRM BOUNDARIES: HOW ORGANIZATIONAL STRUCTURE, GROUP INTERESTS AND RESOURCES AFFECT OUTSOURCING, available at: https://mgmt.wharton.upenn.edu/files/?whdmsaction=public:main.file&fileID=4089 (accessed on May 29, 2012) Fabrizio K. R. (2011), Institutions, Capabilities, and Contracts: Make or Buy in the Electric Utility Industry, available at: http://faculty.fuqua.duke.edu/bio/fabrizio/papers/pdfs/Make%20or%20Buy%20in%20Electric%20Utility.pdf (accessed on May 29, 2012) 1. Vertical and quasi integration- lecture 5 (ppt) 2. Capabilities Approach – lecture 6 (ppt) 3. Strategy and structure - lecture 7 (ppt) For question 3, Boyes, W (2011), Managerial Economics: Markets and the Firm, Cengage Learning, Hoskisson, R. E, (1987), Multidivisional structure and performance: The contingency of diversification strategy, available at: http://www.jstor.org/discover/10.2307/256152?uid=3737496&uid=16421896&uid=2129&uid=2&uid=70&uid=3&uid=60&sid=56214281473 (accessed on May 29, 2012) Hedlund, G (2007), A model of knowledge management and the N-form corporation, Strategic Management Journal, 15 (73-90), available at: http://onlinelibrary.wiley.com/doi/10.1002/smj.4250151006/abstract (accessed on May 29, 2012) Morris, PW.G. Pinto, J.K. & J. Soderlund, (2011), The Oxford Handbook of Project Management, Oxford Handbooks Online. Qian, Y. Ronald, G. & C. Xu (2003), Coordinating Tasks in M-Form and U-Form Organizations, available at: http://emlab.berkeley.edu/~groland/pubs/mform-uform.pdf (accessed on May 29, 2012) Raisch, S et al., (2005), Balancing Autonomy and Cooperation: Organizational Structures in the 21st Century, available at: http://www.hec.unige.ch/www/hec/m1/RecherchePublications/CahiersRecherche/2005/simpleText/0/content_files/file0/2005.13.13.13.13.13.13.13.13.13.13.pdf (accessed on May 29, 2012) 1. Williamson’s t-cost – lecture 3 (ppt) 2. T-cost and internalization 3- lecture 4 (ppt) 3. Williamson revisited – lecture 9 (ppt) 4. Strategy and structure - lecture 7 (ppt) For question 4 Akerlof, G. A. (2002), Psychological and sociological foundations of economic behavior, The American Economic Review, Vol. 74, No. 2, available at: http://www.kgt.bme.hu/targyak/msc/ke/BMEGT30MN05/data/84-wage-as-gift-Akerlof.pdf (accessed on May 29, 2012) Bellemare, C. & B. Shearer (2007), Gift Exchange within a Firm: Evidence from a Field Experiment, available at: http://www.fieldexperiments.com/uploads/giftpaperV24.pdf (accessed on May 29, 2012) Fosu, A.K. Twabu, G.M. and E. Thorbecke (2009), Poverty in Africa: Analytical and Policy Perspectives, University of Nairobi Press Peer groups and hierarchies – lecture 10(ppt) Read More