We propose a theory of the scope of the firm and offer supporting evidence. The theory suggests that multi-business firms exist because they allow better deployment of factors that, because of sub-additive bargaining costs, cannot be traded in fractions or rented for short periods. It predicts...

We propose a theory of the scope of the firm and offer supporting evidence. The theory suggests that multi-business firms exist because they allow better deployment of factors that, because of sub-additive bargaining costs, cannot be traded in fractions or rented for short periods. It predicts...

We look for the equilibrium mix of trading institutions when manufacturers need sequences of labor services. The environment has two critical features: (a) Multilateral matching allows gains from specialization, but players incur specific set-up costs each time they are matched with a new...