This paper argues that the existence of knowledge-intensive firms pose puzzelments for the contractual theories of the firm. For example, in knowledge-intensive firms physical assets are widely absent, the nature of employment relations and assetownership are much less clear compared to industrial firms. Although knowledge-intensive firms account for a growing share in wealth-creation and emplo...

This paper presents estimates from a latent variables model of the relation between corporate governance and financial performance. We use data on large US corporations to estimate the correlation, conditional on the firms’ investment opportunity set, between governance and performance. We find that this correlation is statistically speaking zero. This result is consistent with the “equilibrium...

z Some rights to resources adhere to individuals on the basis of ascribed characteristics-these are rights of person. These rights are not subject to voluntary alienation. And there are rights that adhere to specific characteristics of resources and are subject to alienation. These are rights in property. However, there has been a systematic tendency to promote property rights at the expense of...

Taking an evolutionary view of markets, Harold Demsetz hypothesized that firms ., differ persistently in efficiency and that industry concentration results from growth of ., efficient firms at the expense of inefficient ones. We test the hypothesis with high quality microdata from the US hospital industry, an industry of keen policy and scientific interest. We measure efficiency by firm in the ...

This paper takes steps toward integrating firm theory in the spirit of Alchian & Demsetz (1972) and Grossman & Hart (1986), contract theory in the spirit of Holmstrom (1979), and general equilibrium theory in the spirit of Arrow & Debreu (1954) and McKenzie (1959). In the model presented here, the set of firms that form and the contractual arrangements that appear, the assignments of agents to ...

This chapter is a survey of modern theories of the firm. We categorize these as belonging either to the principal-agent or the incomplete contracting approach. In the former category fall, for example, the Alchian and Demsetz moral hazard in teams theory as well as Holmstrøm and Milgrom’s theory of the firm as an incentive system. Belonging to the incomplete contracting branch are theories that...

This paper investigates the optimal assignment of principalship in teams. We formalize a theory of the firm pioneered by Alchian and Demsetz [Am. Econ. Rev. 62 (1972) 777] using an approach in the spirit of Grossman and Hart [J. Pol. Econ. 94 (1986) 691]. Our theory makes a distinction between production effort and monitoring effort. When it is costly to sign contracts on efforts, it may be opt...

This article examines the institutional consequences of COVID-19 pandemics. It is shown that pandemic-associated changes are related, first to economy digital transformation, and second 2 schemes acting simultaneously. In theory above mentioned reflected in works H. Demsetz D. North. The author factors related demand supply institutions. forecasts framework J.M. Keyens’ «impossible trinity» pri...

In his seminal article, Coase (1960) turned the world of economics upside down. I t might even be said that with one (longish) stroke of the pen, he created the entirely new sub-discipline of Law and Economics; and that he did so out of the ashes of a t least one part of the traditional field as i t stood before his onslaught: that occupied by Pigou (1932). Previously, the view of the professio...

How do property rights evolve when unoccupied areas attract economic use? Who are the first claimants on the frontier and how do they establish their property rights? When do governments provide de jure property rights? We present a conceptual framework that addresses these questions and apply it to the frontiers of Australia, Brazil and the U.S. Our framework stresses the crucial role of polit...