Property Rights and the Nature of the Firm
@article{Hart1990PropertyRA, title={Property Rights and the Nature of the Firm}, author={O. Hart and J. Moore}, journal={Journal of Political Economy}, year={1990}, volume={98}, pages={1119 - 1158} }
This paper provides a framework for addressing the question of when transactions should be carried out within a firm and when through the market. Following Grossman and Hart, we identify a firm with the assets that its owners control. We argue that the crucial difference for party 1 between owning a firm (integration) and contracting for a service from another party 2 who owns this firm (nonintegration) is that, under integration, party 1 can selectively fire the workers of the firm (including… CONTINUE READING
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