The Size of the Firm and Social Division of Labor

23 Pages Posted: 9 Aug 2000

See all articles by Guang-Zhen Sun

Guang-Zhen Sun

Monash University - Department of Economics; Max Planck Institute for Research Into Economic Systems

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Date Written: June 20, 2000

Abstract

We develop a formal model with transaction costs and economies of labor specialization to address the firm size and the level of social division of labor. We show that the decline of firm size and the increase of the level of social division of labor may concur. We also demonstrate that an economically meaningful description of the production technology of the firm could be given by a sensible combination of individual-specific production functions. The (dis)integration of the industrial production process crucially depends on, among other things, the relative transaction efficiency of the labor market with that of the markets for intermediate products.

Keywords: Division of labor, Individual-specific production functions, The size of the firm, Integration of production, Transaction costs

JEL Classification: D21, D23, L11, L22, L23

Suggested Citation

Sun, Guang-Zhen, The Size of the Firm and Social Division of Labor (June 20, 2000). Available at SSRN: https://ssrn.com/abstract=227670 or http://dx.doi.org/10.2139/ssrn.227670

Guang-Zhen Sun (Contact Author)

Monash University - Department of Economics ( email )

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Max Planck Institute for Research Into Economic Systems

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