We conclude with a highly conjectural
but possibly significant interpretation. As
a consequence of the flow of information
to the central party (employer), the firm
takes on the characteristic of an efficient
market in that information about the productive
characteristics of a large set of
specific inputs is now more cheaply available.
Better recombinations or new uses of
resources can be more efficiently ascertained
than by the conventional search
through the general market. In this sense
inputs compete with each other within and
via a firm rather than solely across markets
as conventionally conceived. Emphasis on
interfirm competition obscures intrafirm
competition among inputs. Conceiving
competition as the revelation and exchange
of knowledge or information about qualities,
potential uses of different inputs in
different potential applications indicates
that the firm is a device for enchancing
competition among sets of input resources
as well as a device for more efficiently rewarding
the inputs. In contrast to markets
and cities which can be viewed as publicly
or nonowned market places, the firm can
be considered a privately owned market;
if so, we could consider the firm and the
ordinary market as competing types of
markets, competition between private
proprietary markets and public or communal
markets. Could it be that the
market suffers from the defects of communal
property rights in organizing and
influencing uses of valuable resources?