Toward an economic theory of the multiproduct firm

Abstract

This paper outlines a theory of the multiproduct firm. Important building blocks include excess capacity and its creation, market imperfections, and the peculiarities of organizational knowledge, including its fungible and taut character. A framework is adopted in which profit seeking firms are seen to diversify in order to avoid the high transactions costs associated with using various markets to trade the services of various specialized assets. Neoclassical explanations of the multiproduct firm are shown to be seriously deficient.

Citation

Teece, D.J. (2000), "Toward an economic theory of the multiproduct firm", Baum, J.A.C. and Dobbin, F. (Ed.) Economics Meets Sociology in Strategic Management (Advances in Strategic Management, Vol. 17), Emerald Group Publishing Limited, Leeds, pp. 29-53. https://doi.org/10.1016/S0742-3322(00)17002-0