Library Header Image
LSE Research Online LSE Library Services

Firms' boundaries and the division of labor: empirical strategies

Garicano, Luis and Hubbard, Thomas N. (2006) Firms' boundaries and the division of labor: empirical strategies. Journal of the European Economic Association, 1 (2-3). pp. 495-502. ISSN 1542-4774

Full text not available from this repository.
Identification Number: 10.1162/154247603322391134


A large theoretical literature focuses on the question: What determines firms' boundaries? Recently, Garicano and Santos and Holmstrom and Milgrom have proposed theories in which firms' boundaries reflect the division of labor across individuals. This paper discusses strategies for generating and testing empirical propositions from this emerging class of theories. We propose that variation in the returns to specialization is extremely useful to test and quantify the effect of the division of labor on firms' boundaries. We discuss the use of two shifters to the returns to specialization, and relate how we exploit one of these, market size, in preliminary work on the determinants of law firms' boundaries in the United States

Item Type: Article
Official URL:
Additional Information: © 2009 The MIT Press
Divisions: Management
Centre for Economic Performance
Subjects: H Social Sciences > HC Economic History and Conditions
JEL classification: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure: Markets vs. Hierarchies; Vertical Integration; Conglomerates; Subsidiaries
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L24 - Contracting Out; Joint Ventures; Technology Licensing
L - Industrial Organization > L8 - Industry Studies: Services > L84 - Personal, Professional, and Business Services
L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L14 - Transactional Relationships; Contracts and Reputation; Networks
Sets: Research centres and groups > Managerial Economics and Strategy Group
Departments > Management
Research centres and groups > Centre for Economic Performance (CEP)
Collections > Economists Online
Date Deposited: 27 Oct 2009 17:03
Last Modified: 20 Feb 2021 01:48

Actions (login required)

View Item View Item