A wide-ranging introduction to the foundations and applications of organizational economics—essential for theorists and empiricists across a broad range of fields

The rapidly expanding field of organizational economics studies the activities and interactions of organizations of all kinds, from the firms that are key participants in nearly all economic activity to nonprofits, schools, government agencies, hospitals, political parties, religious groups, labor unions, and more. Organizational Economics introduces students and practitioners to the governance mindset, an innovative, unified approach to understanding how organizations manage difficult transactions. It sheds light on the frictions that plague these difficult transactions as well as the wide variety of instruments that organizations use to manage these frictions. By analyzing foundational models and applying those models to some of the core problems that organizations must face, this comprehensive textbook demonstrates how governance works in the economy and identifies ways for managers, policymakers, and economists to help governance and the economy work better.

• Introduces foundational theories in organizational economics and applies those theories to model important issues that real organizations face
• Takes seriously the conditions under which parties actively manage their interactions rather than governing them by an arms-length transaction, either by choice or necessity
• Covers foundational theories of incentives, control, influence, and relationships
• Applies these models to important topics in organizational economics, including personnel economics, authority, organizational structure, firm boundaries, and interfirm relationships
• Includes problems uniquely designed to help readers engage with the large and growing research literature
• Identifies future directions for research