In this second lecture, using the example of the evolution in the 1990s from the vertically-integrated firm into competitive wholesale power markets in the US, Professor Kiesling discusses how digital technology lowers transaction costs, shifting organizational structure from vertical integration to markets/contracts.
Ronald Coase (1937), “The Nature of the Firm,” TKTK
Jean-Michel Glachant & Dominique Finon (2003), Competition in European Electricity Markets (Edward Elgar)
Paul Joskow (2005), “Vertical Integration,” in Menard & Shirley, eds., Handbook of New Institutional Economics (Springer)
Peter Klein (2005), “The Make or Buy Decision: Lessons From Empirical Studies,” Handbook of New Institutional Economics (Springer)
Klein, Crawford, & Alchian (1978), “Vertical Integration, Appropriable Rents, and the Contracting Process,” Journal of Law & Economics vol. 21