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How? Presumably, or so Alfred Chandler argues, because of technological innovations that led to massive economies of scale and/or scope.
What were the changes in technology that caused bureaucracies to out-perform markets? Here the surprising answer is changes in organizational arrangements themselves. That is: changes in organizational design, personnel systems, operational engineering, accounting systems, and control technologies. This answer reflects the currently fashionable view among economists that the comparative advantage of institutional arrangements boils down to a question of information costs and that actual arrangements are solutions to information problems &emdash; the costs associated with search, bargaining, monitoring, and enforcement...
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