chapter  4
20 Pages

CO-OPERATION AND COMPETITION PARADOXES IN THE THEORY OF THE ORGANISATION OF INDUSTRY

The purpose of our paper is to inquire about what is meant by 'giving content'. This question is mainly a methodological problem that concerns the relationships between theoretical and empirical aspects regarding the functioning of industrial organisation. In fact, in such evolutive areas as the theory of the firm and that of industry, methodology matters because of its real effects on analytical developments. Such effects are related to the analysis of information, which is the core question of modern theories of the firm and industrial organisation. In particular, methodological choices made by

economists have caused them to consider the economic problem as one of allocative efficiency, i.e. almost entirely in relation to price signals. This has had the effect of developing a very narrow view of 'information', conceived as the construction of incentives and information patterns on contractual bases. The focus on contract and transactions has been made at the cost of almost completely neglecting production problems. When Coase complained, in his NBER (National Bureau for Economic Research) address (Coase 1972), that Industrial Organisation had nothing to tell us about the organisation of industry, because it is only applied price theory, a new way of considering the co-ordination problem was opened. The switch to activities and to the capabilities which support them, proposed in the same year by Richardson in his article, can be considered as a methodological development in this new context, which also has real effects on the topics which are discussed by economists, undermining in the process the central notion of economic rationality, and with it the standard concept of information. This is precisely how Richardson gives a deeper empirical content to Coase's theory, as we shall discuss it in our first section.