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Matching problems with expertise in firms and markets

Fuchs, William and Garicano, Luis (2011) Matching problems with expertise in firms and markets. Journal of the European Economic Association, 8 (2-3). pp. 354-364. ISSN 1542-4774

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Identification Number: 10.1111/j.1542-4774.2010.tb00507.x


When should expertise be shared in markets and when in firms? Knowledge exchanges in the market involve less information about the quality of the provider's expertise, but facilitate good utilization of experts' knowledge. In a firm, management holds soft information about individuals' expertise and thus improves on the matching of experts to problems; however, the usage of experts is not smooth and thus firms experience over- or underutilization of experts' time. Thus the trade-off between firms and markets is between utilization (the market allows for better, smoother, utilization of knowledge than firms) and the quality of matching between problems and problem solvers (the market provides less information about experts' quality).

Item Type: Article
Official URL:
Additional Information: © 2011 Wiley-Blackwell
Divisions: Economics
Centre for Economic Performance
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor
JEL classification: D - Microeconomics > D2 - Production and Organizations > D21 - Firm Behavior
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
Date Deposited: 29 Jun 2011 10:41
Last Modified: 16 May 2024 01:15

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