Alchian, ArmenA.,andHaroldDemsetz.1972."Production, Information Costs,
andEconomicOrganization." AmericanEconomicReview,62(5): 777-95.
Whatisthespecialroleofthefirminorganizingproduction? Theauthorsargue
thatitis theabilitytomeasureinputsandtheirproductivity andtoallocatehired
resourcesinproductioninvolvingthecooperationofmanyinputs.Itis thisphenomenonthatexplainswhyallcooperationoffactors doesnottakeplacethrough
market-determined contracts. Thefirmismadetobetheresidualclaimantbecause
thatapproachcreatestheappropriate incentives formanagement. Manyimplicationsofthishypothesis aredeveloped