Firm Emergence in a Thick Market: the Boundaries and Management of Voluntary Organization

Abstract

We study the rationale for integrating production in firms from an evolutionary and value perspective. We develop a robust model of the “thick” market, a realistic pure market regime including real people rather than economic maximizers, using the economic theory of anarchism. Our findings suggest that optionality is an important determinant of market structure, and have implications for how we view the market, the firm, and management, and identifies a peculiar role of management under voluntary contract. Our conclusions show a pure economic function of the firm, and suggests need for an anarchist approach to the study of organization.