Showing papers by "Oliver E. Williamson published in 1967"

Hierarchical Control and Optimum Firm Size

Abstract: There is a great deal of evidence that almost all organizational structures tend to produce false images in the decision-maker, and that the larger and more authoritarian the organization, the better the chance that its top decision-makers will be operating in purely imaginary worlds. This perhaps is the most fundamental reason for supposing that there are ultimately diminishing returns to scale.

Externalities, Insurance, and Disability Analysis

Abstract: Although the recent literature on externalities has done much to clarify the issues2, important problems in the analysis of externalities remain. This article attempts to deal with some of them. As Coase has observed, "Satisfactory views on policy can only come from a patient study of how, in practice, the market, firms, and governments handle the problem of harmful effects" [5, p. 18]. We would agree and extend this to include a statement that a patient study of practice can lead not only to policy improvements but also to theoretical refinements. Whereas the previous literature on externalities is almost entirely concerned with problems of non-human wealth, we are concerned here principally with aspects of human wealth which involve disability conditions. Similarly, whereas the previous literature deals with deterministic conditions for which damages are objectively specified, we treat the case where damages occur stochastically and the extent of damage is imperfectly specified. Moreover, whereas insurance is irrelevant when damages are deterministic, this is an important aspect of the analysis when probabilistic conditions prevail. Finally, while the previous literature on externalities has focused mainly on the objective of allocative efficiency and subordinates or dismisses equity objectives, and while the literature on disability neglects allocative effects, we attempt a combined analysis. Extending the analysis in these several ways in no sense requires that we begin anew. Quite the contrary: the existing externalities theory provides us with a solid foundation. We review the salient aspects of this theory in Section 1. The disability and insurance problems are studied in Section II. Applications of the theory to automobile and radiation damage and workmen's compensation generally are given in Section III. The findings are summarized in Section IV.