Abstract
The purpose of this paper is to compare theories of firms and mergers offered by Oliver Williamson and Thorstein Veblen. Williamson elaborated Coase's theory of the firm into a transaction cost framework that resembles Veblen's approach in some respects, in that both place emphasis on transactions in explaining the emergence and expansion of large firms. Yet this apparent similarity is misleading and the differences revealing. I will illustrate these differences with a brief interpretation of firm strategies from the early business history of the automobile industry and then conclude that the new institutionalism and new industrial organization derived from the ideas of Williamson have ignored Veblen to their peril. In The Theory of Business Enterprise, first published in 1904, Veblen wrote:
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