lecture20 - Economics 103 Lecture # 20 Economic...

Info iconThis preview shows pages 1–7. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 103 Lecture # 20 Economic Organization
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The last lecture argued that PR systems were designed to mitigate TC problems. We can think of a spectrum of organizations. Today we’ll start at the left end of the spectrum and work our way over.
Background image of page 2
Why is production organized within a firm? Think of how differently is from In all cases, firms are designed to make the incentives of workers compatible with those of the owners of capital. Depending on what is being made, the firm might end up being complicated or simple.
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The Family Farm - let’s consider a very simple industry. - at one time virtually everything was organized around the family. - now family production dominates only in farming and procreation. Why is it if you run a cow/calf operation, you do it as a family, but if you grow chickens you’re controlled by
Background image of page 4
The advantage of large scale, factory production, is the gains from specialization. On an assembly line you have to monitor workers. Often this isn’t too hard to do. When will workers be able to cheat/shirk the firm? When nature plays a large role.
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
The problem with farming, compared to other types of production, is it takes place outdoors. Nature plays a large role (good and bad). Thus wage workers can blame low crops on the weather. Which means workers can shirk a lot and get away with it.
Background image of page 6
Image of page 7
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 04/16/2009 for the course ECON 103 taught by Professor Hanafiahharvey during the Winter '08 term at Simon Fraser.

Page1 / 28

lecture20 - Economics 103 Lecture # 20 Economic...

This preview shows document pages 1 - 7. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online