Discrete institutional alternatives: Theoretical and policy issues (Celebrating the 80 th anniversary of Ronald Coase's “Nature of the Firm”)

Andrey Shastitko and Claude Ménard ()
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Claude Ménard: CES - Centre d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique, UP1 UFR02 - Université Paris 1 Panthéon-Sorbonne - École d'économie de la Sorbonne - UP1 - Université Paris 1 Panthéon-Sorbonne

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Abstract: This paper addresses the comparative analysis of discrete institutional alternatives in organizing transactions among distinct economic entities. The theoretical framework for understanding this issue was introduced by Ronald Coase 80 years ago. Following this seminal contribution, a standard theoretical distinction now exists between the institutionally embedded set of economic exchanges (the transactions) and the institutional settings within which these transactions are organized, firms and markets being the epitomized polar cases. On the normative side, this approach facilitated better understanding of failures and flaws in the organization of numerous transactions and of how to fix them. Three examples are provided to illustrate the issues at stake: contracting on large diameter pipes for PJSC "Gazprom" infrastructure projects, contracting in commercial real estate, and determining governance mechanisms for companies facing significant switching costs in highly concentrated markets.

Keywords: transactions; institutions; discrete institutional alternatives; contracts; market failures (search for similar items in EconPapers)
Date: 2017-06
Note: View the original document on HAL open archive server: https://hal.science/hal-04011898v1
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Published in Russian Journal of Economics, 2017, 3 (2), pp.200-220. ⟨10.1016/j.ruje.2017.06.005⟩

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Working Paper: Discrete institutional alternatives: Theoretical and policy issues (Celebrating the 80 th anniversary of Ronald Coase's “Nature of the Firm”) (2017)
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04011898

DOI: 10.1016/j.ruje.2017.06.005

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