I use this blog to gather information and thoughts about invention and innovation, the subjects I've been teaching at Stanford University Continuing Studies Program since 2005.
The current course is Principles of Invention and Innovation (Summer '17).
Our book "Scalable Innovation" is now available on Amazon http://www.amazon.com/Scalable-Innovation-Inventors-Entrepreneurs-Professionals/dp/1466590971/
Sunday, October 18, 2009
Trade-off of the Day: the economics of bargaining.
Organizing the transaction within a firm centralizes decision rights, thereby saving on bargaining costs and reducing the risk of bargaining impasse, but at the same time allows executives more scope to extract rents in inefficient ways. The net effect of this trade-off depends on both the difficulty of writing useful contracts ex ante and the extent to which assets are relationship-specific ex post.
A common trade-off in a control system. It would make a good case study: trade-off -> dilemma -> solution (separation in time and, probably, action).
tags: trade-off, economics, control, dilemma, problem, example, course