PRIFYSGOL ABERYSTWYTH UNIVERSITY
DEGREE EXAMINATIONS – January 2009
ARHOLIADAU GRADD – Ionawr 2009
SEMESTER 1
EC31410
ECONOMICS OF ORGANISATIONS
Time allowed: ONE AND A HALF hours
Answer TWO questions
1. What is meant by transaction costs and how do they arise? What is the basis
for the transaction cost argument for the existence of firms?
2. Critically examine the alternative explanations for vertical integration. Why
might firms adopt looser forms of vertical arrangements?
3. Distinguish between concentric and conglomerate diversification. Explain
what is meant by ‘economies of scope’ and consider its relevance for
explaining different forms of diversification in contrast to other explanations.
4. Describe the key features of M-form organisation, and explain why it emerged
as an alternative to the U-form of internal organisation within a firm. In what
sense does the M-form perform the role of a miniature capital market?
5. Explain the nature and implications of the Principal-Agent problem in the
context of firm ownership and control.
AND
Examine the various internal and external mechanisms for controlling
managerial discretion.
End of Paper