Title: How to Determine the Boundary of the Firm?——A Summary of the Literature on the Theory of Incomplete Contract
Abstract: The problem of determination on the boundary of the firm originated from the analysis on transaction cost in Coase (1937). Transaction is the basic units of economic analysis, is a process of distributing economic rent by division of property right and relocation, wherever contract is the institution arrangement. Accordingly, incomplete contracts are becoming the one of important content on mainstream of economic theories after Coase. Transactions encounter difficulties because of con- tractual incompleteness. At the same time, the authority on creating and distributing rent, and more of who holding and control- ling assets, turns into the basic problem to be resolved. The self-enforcing mechanism, the theory of assets allocation and ac- cess theory provide successfully the solution to resolving the problem. This paper comparatively analyses the three issues, and gives a useful discussion.
Publication Year: 2005
Publication Date: 2005-01-01
Language: en
Type: article
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