SummaryIn this LP we learn about cost efficiency, how to reduce costs while maintaining volume and quality. After understanding how cost efficiency can be achieved, we turn to the main critiques of neoclassical cost analysis. Up to now, everything sounded just as what they’ve been teaching us at school and college. However, a few theories stood up against all this, mainly form Industrial Organization theory.
Achieving cost efficiency:
Critiques to neoclassical theories:
- Industrial organization
- George Stigler
- Stigler’s cost theory
George Joseph Stigler, 1911-1991, was an American economist and Professor at Brown University, Columbia and University of Chicago. Furthermore, and regarding the University of Chicago, he stands out as one of the most prominent members of the School of Chicago. Stigler was awarded the Nobel Prize in Economic Sciences in 1982 for his researches regarding industrial structures, functioning of markets and causes and effects of public regulations.
From Stigler’s contribution to the microeconomic theory and industrial organization we can highlight his work of enhancement and adaptation of microeconomics in such a way, that it allows its use and analysis in a great range of real phenomena. In this field we find Stigler’s cost analysis theory, which changed the way we understand economies of scale. Amongst his top works we can find “The Economics of Information”, 1961 and “The Theory of Economic Regulation”, 1971.
Stigler also produced a great amount of work as a historian of the economic thought. His merit does not related to the amount he covered, but the depth and originality of his analysis, and how clarifying they were. We can highlight his first economic history book “Production and Distribution Theories” 1941, that studies the formative period of neoclassical economics.