Quarterly Journal of Economics Vol. 113 No. 2 1998
Power in a Theory of the Firm
Abstract
Transactions take place in the rm rather than in the market because the rm o ers agents who make speci c investments power. Past literature emphasizes the allocation of ownership as the primary mechanism by which the rm does this. Within the contractibility assumptions of this literature, we identify a potentially superior mechanism, the regulation of access to critical resources. Access can be better than ownership because: i) the power agents get from access is more contingent on them making the right investment; ii) ownership has adverse e ects on the incentive to specialize. The theory explains the importance of internal organization and third party ownership. A preliminary version of this paper circulated with the title \\Implicit Property Rights in a Theory of the
- DOI
- 10.1162/003355398555630
- Volume
- 113
- Issue
- 2
- Pages
- 387-432
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref