Information asymmetries and the creation of economic value : a theory of market and industry dynamics

What do Darwins theory of evolution and the second law of thermodynamics contribute to our understanding of the world in which we live? More than you think: the combination of both produces what is called a general systems theory of evolution. The second law of thermodynamics has been popularly formulated as:Systems that are left alone develop in a direction of increasing disorder. While buildings that are left alone develop into ruins, the reverse process requires the input of solid and skilled labor. On the other hand, evolution clearly proceeds in the direction of increased complexity. Ordered systems, such as human kind, evolved apparently spontaneously out of an initially unordered state. Information Asymmetries and the Creation of Economic Value has the challenging ambition of investigating the relationship between the former theories and the storage, processing and transfer of information to grasp the dynamics of economies, markets and industries, adding a practical side to the pure theory. This book develops a conceptually and mathematically consistent framework for existing concepts used in organizational economics. And it does so in a way accessible to readers that are not familiar with modeling approaches, overcoming the lack of consistency and accessibility that is common in econophysics and complementing, thus, existing approaches in the literature. An essential read for those that finally want to be able to understand and use evolutionary approaches to organizations, whether they are familiar with the subject or not. IOS Press is an international science, technical and medical publisher of high-quality books for academics, scientists, and professionals in all fields. Some of the areas we publish in: -Biomedicine -Oncology -Artificial intelligence -Databases and information systems -Maritime engineering -Nanotechnology -Geoengineering -All aspects of physics -E-governance -E-commerce -The knowledge economy -Urban studies -Arms control -Understanding and responding to terrorism -Medical informatics -Computer Sciences Title page......Page 2 Table of contents......Page 8 General introduction......Page 14 Industry: Competition, growth and decay......Page 15 The nature of value and value transaction processes......Page 17 Self organizing systems: Dissipative structures......Page 19 The microscopic foundations of the macroscopic description......Page 21 Organization of this work......Page 22 Literature cited......Page 23 Macroscopic balance equations: The first and second law of thermodynamics......Page 24 Constraints due to the first and second laws of thermodynamics......Page 26 The Carnot cycle......Page 29 Conclusion......Page 31 Literature cited......Page 32 Information theory......Page 33 The formalism of statistical thermodynamics......Page 36 Towards a general value transaction theory......Page 41 Conclusion......Page 44 Literature cited......Page 46 The capital asset pricing model......Page 47 A comparison of CAPM and VTT......Page 52 Conclusion......Page 56 Literature cited......Page 57 Introduction......Page 58 The generalized "Carnot Cycle" ......Page 59 An elementary free value transducer: The concept of price......Page 61 A generalized market transaction......Page 63 Conclusion......Page 65 Literature cited......Page 67 Production of statistical entropy: The concept of rates and forces......Page 68 The linear phenomenological equations......Page 70 The second law of value transaction revisited......Page 71 The linear free value transducer......Page 72 The linear free value transducer and the concept of maintenance dissipation......Page 79 Conclusion......Page 80 Literature cited......Page 82 The stability of non-equilibrium steady states......Page 83 Evolution and the linear free value transducer......Page 86 Conclusion......Page 87 Literature cited......Page 89 Introduction......Page 90 Evolution beyond the linear range......Page 91 The Benard problem and instability of the macroscopic branch......Page 98 Instability of the macroscopic branch in chemical reaction systems......Page 100 A generalized free value transducer......Page 103 Evolution through fluctuation and selection: The general case......Page 106 Competition and sustained evolution......Page 108 The dynamics of competition......Page 110 Biological evolution: Dissipative structures and information processing......Page 112 Conclusion......Page 114 Literature cited......Page 116 The dynamics of competition and selection......Page 117 The dynamics of selection in Darwinian systems......Page 119 Information content and the error threshold in evolution......Page 122 Models of Darwinian systems: The Hypercycle......Page 125 Competition and selection: An approach based on VTT......Page 127 The nature of the firm and its evolution......Page 132 Differences and similarities between biological and economic evolution......Page 134 Conclusion......Page 135 Literature cited......Page 137 Introduction......Page 138 The firm as an information processing structure......Page 139 Competition and risk......Page 141 The industry life cycle......Page 144 Industry structure: The nature of entry barriers......Page 148 Value transaction theory and the value chain......Page 150 The internal value chain......Page 152 Aspects of competence, technology and R&D management......Page 154 An evolutionary view of corporate development......Page 160 Aspects of Joint Ventures, Divestitures, Mergers and Acquisitions......Page 165 Strategy Development......Page 167 Economic cycles and fluctuations and the dynamics of systems......Page 168 Conclusion and prospects......Page 172 Literature cited......Page 176 Glossary of salient terms......Page 178 Develops a conceptually and mathematically consistent framework for the concepts used in organizational economics. This book is suitable for those who want to be able to understand and use evolutionary approaches to organizations, whether they are familiar with the subject or not.