Theory of Firms Oluwatobi 17600067.

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Presentation transcript:

Theory of Firms Oluwatobi 17600067

Where the ownership and control is separated, the owners (shareholders) rely on the board of directors (Managers) to represent their interests. Do these Managers always represent the interest of the owners? Berle and Means (1932)

There is a conflict of interest and usually at the shareholder’s expenses

Are Markets efficient. If Yes, why do we have Firms Are Markets efficient? If Yes, why do we have Firms? Transaction cost- Costs associated with engaging in transactions. Coase (1937)

What are the engine of Capitalism What are the engine of Capitalism? Organizations were effective, adaptive and always looking for new products. Compete well and armed with cutting-edge innovation to stay alive Schumpeter (1939)

Industrial Organization Economics Structure of market to be determined by cost and nature of inputs Market structure efficiency OR Oligopoly Industrial Organization Economics