Markets, Contracts, and Firms: A Unified Model of Organizational Choice

Thomas Miceli ()

No 2011-08, Working papers from University of Connecticut, Department of Economics

Abstract: This paper examines markets, firms, and the law as alternative institutional arrangements for organizing transactions that involve transaction-specific investments and uncertain performance. The analysis is the logical extension of Coase's seminal examination of the market-firm boundary on one hand, and the market-law boundary on the other. It thus combines insights from the literature on industrial organization and law and economics. The result is a unified framework that reveals the relative advantages and disadvantages, within a fairly simple economic setting, of market exchange, court ordering (contracts), and internal governance (agency).

Keywords: Asset specificity; contracts; firms; markets; transaction costs (search for similar items in EconPapers)
JEL-codes: D23 K12 L14 L22 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec and nep-com
Date: 2011-04
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Persistent link: http://EconPapers.repec.org/RePEc:uct:uconnp:2011-08

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