diseconomies of coordination Archives — LIRNEasia

When Bill Melody was appearing as an expert witness in the AT&T case back in the 1980s, he used to be assailed about economies of scale that AT&T supposedly enjoyed, which made them per se more efficient than any of the challengers. His answer was not that they did not exist, but that they were overridden by diseconomies of coordination. His conclusion is being supported by two scientists from Santa Fe Institute. The discussion of corporations comes at the end of a fascinating article on the laws governing cities in the NYT. This raises the obvious question: Why are corporations so fleeting?