Lecture 9 notes - Lecture 9 notes: 2/5/09 Williamson is...

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Lecture 9 notes: 2/5/09 Williamson is saying that we have to be weary of the possibility that we can get screwed over Opportunism: potential that we face; basis for transaction costs Horizontal combination: potential competitors brought together in a single firm Reasons: avoid competition, gives you more control over the market--ability to set prices; Economies of scale: situations in which it is more efficient to produce on the larger scale Why did we get vertical integration? More efficient way to operate Perrow: Doesn’t believe that efficiency is politically neutral Believes efficiency/ vertical integration is to gain control Perrow’s example: All song costs have gone into long term contracts, stuck. Big four’s response: It was successful because it restored market share; Its true that vertical integration was effective in terms of profit making, but trying to argue that it was not efficient; Perrow’s conclusions: What is driving the companies is getting control of the market to make more
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Lecture 9 notes - Lecture 9 notes: 2/5/09 Williamson is...

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