Information Gathering, Transaction Costs, and the Property Rights Approach

@article{Schmitz2005InformationGT,
  title={Information Gathering, Transaction Costs, and the Property Rights Approach},
  author={Patrick W. Schmitz},
  journal={Law \& Economics},
  year={2005}
}
  • P. Schmitz
  • Published 1 December 2005
  • Economics
  • Law & Economics
The property rights approach to the theory of the firm suggests that ownership structures are chosen in order to provide ex ante investment incentives, while bargaining is ex post efficient. In contrast, transaction cost economics emphasizes ex post inefficiencies. In the present paper, a party may invest and acquire private information about the default payoff that it can realize on its own. Inefficient rent seeking can overturn prominent implications of the property rights theory. In… Expand
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