Fall 2021 - ECON 426W D100

Industrial Organization: Governance and Institutions (3)

Class Number: 3212

Delivery Method: In Person


  • Course Times + Location:

    Tu 10:30 AM – 12:20 PM
    AQ 2122, Burnaby

    Fr 10:30 AM – 11:20 AM
    WMC 3511, Burnaby

  • Exam Times + Location:

    Dec 15, 2021
    8:30 AM – 11:30 AM
    WMC 3253, Burnaby

  • Prerequisites:

    ECON 302 with a minimum grade of C-.



A study of how markets, firms and other institutions are organized using information and transaction cost theories. Topics covered may include: theories of the firm (governance, structure, ownership, signaling and screening behavior); theories of non-market institutions (marriage, non-profit organizations, governments); institutional theories of growth and economic history; and the organization of markets (reputations, contracts, vertical control). Emphasis will be given to covering a limited number of issues and theoretical perspectives in detail rather than attempting a broad survey of new institutional economics. Students with credit for ECON 426 may not take this course for further credit. Writing.


We will explore possible explanations for the fact that large firms are normally controlled by capital suppliers rather than labor suppliers.  The first step is to study a range of cases in which firms are managed by their employees, and the next step is to develop economic concepts about the organization of firms.  We will then consider work incentives, capital constraints, risk aversion, collective choice, and other stories about why investors usually control firms.  We will examine the economic theory behind each story and the empirical evidence that tends to support or contradict it.

Some policy issues will also be addressed.  Should employees be represented on a firm's board of directors?  Does it make any sense to subsidize purchases of corporate stock by employees?  Should governments encourage worker takeovers of closing plants or failing firms?  We will probably not reach any unanimous conclusions on these issues, but after finishing the course your ideas should be clearer than when you began.   

We will spend one week on each chapter of the required textbook.  The chapter titles are as follows:

  1. Introduction
  2. Normative Perspectives
  3. Workers' Control in Action (I)
  4. Workers' Control in Action (II)
  5. Conceptual Foundations
  6. Explanatory Strategies
  7. A Question of Objectives
  8. Views from Economic Theory (I)
  9. Views from Economic Theory (II)
  10. Transitions and Clusters
  11. Toward a Synthesis
  12. Getting There From Here


  • Class participation 25%
  • Two papers (25% each) 50%
  • Final exam 25%



Governing the Firm: Workers' Control in Theory and Practice, by Gregory K. Dow, New York, Cambridge University Press, 2003.

Department Undergraduate Notes:

Please note that, as per Policy T20.01, the course requirements (and grading scheme) outlined here are subject to change up until the end of the first week of classes.

Final exam schedules will be released during the second month of classes. If your course has a final exam, please ensure that you are available during the entire final exam period until you receive confirmation of your exam dates. 

Students requiring accommodations as a result of a disability must contact the Centre for Accessible Learning (CAL) at 778-782-3112 or caladmin@sfu.ca.


Registrar Notes:


SFU’s Academic Integrity web site http://www.sfu.ca/students/academicintegrity.html is filled with information on what is meant by academic dishonesty, where you can find resources to help with your studies and the consequences of cheating.  Check out the site for more information and videos that help explain the issues in plain English.

Each student is responsible for his or her conduct as it affects the University community.  Academic dishonesty, in whatever form, is ultimately destructive of the values of the University. Furthermore, it is unfair and discouraging to the majority of students who pursue their studies honestly. Scholarly integrity is required of all members of the University. http://www.sfu.ca/policies/gazette/student/s10-01.html


Teaching at SFU in fall 2021 will involve primarily in-person instruction, with approximately 70 to 80 per cent of classes in person/on campus, with safety plans in place.  Whether your course will be in-person or through remote methods will be clearly identified in the schedule of classes.  You will also know at enrollment whether remote course components will be “live” (synchronous) or at your own pace (asynchronous).

Enrolling in a course acknowledges that you are able to attend in whatever format is required.  You should not enroll in a course that is in-person if you are not able to return to campus, and should be aware that remote study may entail different modes of learning, interaction with your instructor, and ways of getting feedback on your work than may be the case for in-person classes.

Students with hidden or visible disabilities who may need class or exam accommodations, including in the context of remote learning, are advised to register with the SFU Centre for Accessible Learning (caladmin@sfu.ca or 778-782-3112) as early as possible in order to prepare for the fall 2021 term.