2004 Articles

Information and the Change in the Paradigm in Economics, Part 2

Stiglitz, Joseph E.

The second part of a series on the change in the paradigm in economics examines the new theory of the firm. Topics discussed include how the competitive paradigm that was dominant for two centuries failed to explain key economic phenomena and produced misguided policy prescriptions, how information affects political processes, and the theories of corporate finance, corporate governance, and organizational design as the three pillars supporting the modern theory of the firm.