Property Rights and the Nature of the Firm

@article{Hart1990PropertyRA,
  title={Property Rights and the Nature of the Firm},
  author={Oliver Hart and John. 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… Expand
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