Information Economics and Industrial Organization

Abstract

Interest in merging industrial organization and information economics appears to center primarily on the wide range of intermediate institutional solutions which are to be found between the two extremes of Markets and Hierarchies. Network firms emerge when both costs of using Hierarchies and costs of using Markets are very high and benefits of economies of scale are low. Network firms cluster around complementary and interdependent productive relations that involve the shared use of interrelated factors and have a highly specific and idiosyncratic character.