Opportunism, Hold-Up and the (Contractual) Theory of the Firm

James H. Love

Journal of Institutional and Theoretical Economics (JITE), 2010, vol. 166, issue 3, 479-501

Abstract: This paper considers the role of opportunism in three contractual theories of the firm: rent-seeking theory, property rights theory, and agency theory. In each case I examine whether it is possible to have a functioning contractual theory of the firm without recourse to opportunism. Without opportunism firms may still exist as a result of issues arising from (incomplete) contracting. Far from posing a problem for the theory of the firm, questioning the role of opportunism and the ubiquity of the hold-up problem helps us understand more about the purpose and functions of contracts which go beyond mere incentive alignment.

JEL-codes: L14 L22 (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (5)

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