What is a firm?

In Macroeconomics: A firm is a “point” taking rational decisisons in a market environment (what inputs to buy in order to sell the outputs)

Transformation: means acitvities, production, processes, inputs include labor, equipement, commodities

Aim of a firm: Maximize its profit

Possible answers: To produce, to start and develop businesses, to exploit, to invest, to give jobs

Alternatives: Markets, state, communities

Complements or subsitutes

Upstream and Downstream

Analytical answers:

• Transaction costs

• property rights,

• strategy,

• contracts

Environment specificity (Foreclosure)

Factors of production “natural” (rents)

Innovation specificity (poperty rights)

Organisation specificity (matrix, mulitdimensional)

Price: Price Taker, Price Maker, Strategic Price

Technology: Maker, Taker, Leader, Follower

Products: Standardized Commodities, Differentiation, Range, Segments, Personalization

Location: Where, how many establishments, factories