Evolution of firms Households were self-sufficient but Household inefficient because of losing the advantage of specialization(工业革命前 主要组织形式是业主制，个体作坊) Economies of scale Bring together all resources in one place and pooling their efforts in the production.This system would give the Factory system advantages of specialization and division of labor as well as eliminate transaction Efficiency of and transportation costs.(工业革命- 1840s,主要是合伙制形式) management Separating ownership from the operation of the business.The owners,as residual Firms claimants,contract with workers for a fixed amount of their labor for a fixed payment. 经管学院丁琪琳经管学院 丁琪琳 Household Factory system Firms Households were self-sufficient but inefficient because of losing the advantage of specialization(工业革命前 ，主要组织形式是业主制，个体作坊) Bring together all resources in one place and pooling their efforts in the production. This system would give the advantages of specialization and division of labor as well as eliminate transaction and transportation costs.(工业革命- 1840s,主要是合伙制形式) Separating ownership from the operation of the business. The owners ,as residual claimants, contract with workers for a fixed amount of their labor for a fixed payment. Evolution of firms Economies of scale Efficiency of management