The Economics of Organization
Spring 2001
MW 9:30-10:45
Room 311 Monteith
R. N. Langlois
Assignment 3
In
both Jensen-and-Meckling and Cheung, we discovered the idea that a firm is just
a “nexus of contracts,” and that it is futile to try to pin down more precisely
what it means for an arrangement to be a firm or for a transaction to be
internal to a firm. Oliver Hart
disagrees, and asserts that he has a clear way to define a firm and delineate
its boundaries.
·
Discuss Hart’s approach and explicate its differences
from the “nexus of contracts” view.
·
How is the explanation of the firm in Barzel's “The
Entrepreneur's Reward for Self-Policing” similar to that of Hart? How is it different?
·
How would you criticize Hart’s approach?
The
readings in the “incomplete contracts” part of the syllabus provide a place to
start.
Due:
March 14.