ABSTRACT
Price and authority are often presented as alternative social mechanisms for allocating and controlling resources (Arrow 1974; Coase 1937; Ouchi 1979, 1980; and Williamson 1975, 1985). Traditionally, "price" characterizes the vocabulary of economists, who study markets. "Authority" belongs to that of sociologists, who study hierarchies. In markets, resources are allocated through prices. In hierarchies, they are allocated through authority. However, empirical studies have shown that markets may contain authority properties found within a firm (Corey 1976, 1978; Eccles 1981; Jackson 1985; Macaulay 1963; Stinchcom be and Heimer 1985) and that multidivisional firms may contain pricing mechanisms found in markets (Chandler 1962; Eccles 1985; Lorsch and Allen 1973; and Vancil 1978). Overall, it now seems clear that the traditional con-
1 The authors would like to thank Sherwin Rosen, Chris Winship, and two anonymous referees for helpful comments on an earlier draft of lhis paper. Requests for reprints should be sent to Robert G. Eccles, Graduate School of Business Administration, Harvard University, Boston, Massachusetts 02163.
