Institutional Arrangement on Division of Labor and Change of Firm Boundary in the Governance Process of Vertical Transaction

Vertical transaction governance between upstream and downstream enterprises based on division of labor is more and more emphasized.By introducing transaction costs,Coase analyzes the boundary between firm and market;according to Coase's theory,Williamson points out that different transaction is corresponding with different governance structure.Distinguished from the common choice of transaction governance structure,in fact,vertical transaction governance is the choice of institutional arrangement on division of labor.In the process of the choice,not only transaction cost should be considered,but benefit of different institutional arrangement on division of labor should also be considered,and the implementation of different institutional arrangement on division of labor depends on change of firm boundary.