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Transaction-specific investments and organizational choice: a Coase-to-Coase theory

Published online by Cambridge University Press:  12 September 2014

THOMAS J. MICELI
THOMAS J. MICELI*
Affiliation:
Department of Economics, University of Connecticut, Storrs, CT 06269-1063, USA
*
*E-mail: [email protected]
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Abstract

This paper examines markets, firms, and the law as alternative institutional arrangements for organizing transactions that involve transaction-specific investments and uncertain performance. The analysis is the logical extension of Coase's seminal analysis of the market-firm boundary on one hand, and the market-law boundary on the other. It thus combines insights from the literature on industrial organization and law and economics. The result is a unified framework that reveals the relative advantages and disadvantages, within a fairly simple economic setting, of market exchange, court ordering (contracts), and internal governance (agency).

Type
Research Article
Information
Journal of Institutional Economics , Volume 11 , Issue 2: Ronald H. Coase Memorial Issue , June 2015 , pp. 283 - 299
Copyright
Copyright © Millennium Economics Ltd 2014 

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