Qualification: Contractibility and Asset Ownership: On-Board Computers and Governance in U.S. Trucking
Baker and Hubbard make firm boundaries observable as a response to verification technology. Using detailed trucking data, they examine whether on-board computers changed the contractibility of driver actions and, through that change, truck ownership. Adoption reduced driver ownership, especially for long hauls. It moved production toward more integrated asset ownership. The result supports Kaal's proposition that a firm's boundary can vary with the technology used to verify performance. It also qualifies it sharply: better verification did not make the firm disappear. In this setting, it reduced independent contracting and produced larger firms. The comparison remains bounded. On-board computers monitored truck drivers in one industry. They did not test autonomous agents, computational abundance, or Kaal's residual verification architecture, and the results do not establish that every improvement in verification expands firm boundaries. Baker and Hubbard show instead that direction depends on how contractibility alters incentive and bargaining costs. Their evidence supports the empirical program. It does not establish a universal boundary rule.
economicsinstitutional-designscholarly-growth-coveragescholarly-literaturefirm-boundariesverification-technologycontractibilityasset-ownershipvertical-integration