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The Ownership of the Firm under A Property Rights Approach

Author

Listed:
  • Leshui He

    (University of Connecticut)

Abstract
The boundaries of the firm and the ownership of the firm have been two of the main themes of the economics of organization over the past several decades. In this paper, I develop a general multi-party framework that integrates the ownership of the firm into the property-rights approach to the firm. I consider the ownership of the firm as the ownership of the rights to terminate cooperation with any party while maintaining a contractual or employment relation with all the other related parties of the firm. The model in this paper allows for the separation of the ownership of the firm from the ownership of the alienable assets that partly constitute it. Such a general multi-party setup may provide new tools for the study of the problem of the firm's boundaries as well as inspiration for further applications of the theory of property rights.

Suggested Citation

  • Leshui He, 2010. "The Ownership of the Firm under A Property Rights Approach," Working papers 2010-23, University of Connecticut, Department of Economics.
    • Handle: RePEc:uct:uconnp:2010-23
    Note: The author is grateful to Professor Richard N. Langlois as the dissertation advisor, and Professor Christian Zimmermann, Professor Vicki I. Knoblauch as the committee members for advice and suggestions, and to Professor Thomas J. Miceli, Professor Kathleen Segerson, Professor Xenia Matschke, and seminar participants at the Univ. of Connecticut for helpful comments. Any remaining errors are those of the author's alone.
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    References listed on IDEAS

    as
    1. Hart, Oliver & Moore, John, 1990. "Property Rights and the Nature of the Firm," Journal of Political Economy, University of Chicago Press, vol. 98(6), pages 1119-1158, December.
    2. Ricardo J. Caballero & Mohamad L. Hammour, 1998. "The Macroeconomics of Specificity," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 724-767, August.
    3. Dow, Gregory K. & Putterman, Louis, 2000. "Why capital suppliers (usually) hire workers: what we know and what we need to know," Journal of Economic Behavior & Organization, Elsevier, vol. 43(3), pages 319-336, November.
    4. Alchian, Armen A & Demsetz, Harold, 1972. "Production , Information Costs, and Economic Organization," American Economic Review, American Economic Association, vol. 62(5), pages 777-795, December.
    5. Grossman, Sanford J & Hart, Oliver D, 1986. "The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 691-719, August.
    6. Williamson, Oliver E, 1971. "The Vertical Integration of Production: Market Failure Considerations," American Economic Review, American Economic Association, vol. 61(2), pages 112-123, May.
    7. Patrick W. Schmitz, 2006. "Information Gathering, Transaction Costs, and the Property Rights Approach," American Economic Review, American Economic Association, vol. 96(1), pages 422-434, March.
    8. Hansmann, Henry, 1988. "Ownership of the Firm," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 4(2), pages 267-304, Fall.
    9. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    10. Klein, Benjamin & Crawford, Robert G & Alchian, Armen A, 1978. "Vertical Integration, Appropriable Rents, and the Competitive Contracting Process," Journal of Law and Economics, University of Chicago Press, vol. 21(2), pages 297-326, October.
    11. Holmstrom, Bengt, 1999. "The Firm as a Subeconomy," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 15(1), pages 74-102, April.
    Full references (including those not matched with items on IDEAS)

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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Ownership of the Firm under a Property Rights Approach
      by Dick Langlois in Organizations and Markets on 2010-10-06 00:31:19

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    More about this item

    Keywords

    Owner of the Firm; Boundary of the Firm; Property Rights Theory; Theory of the Firm.;
    All these keywords.

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • Y4 - Miscellaneous Categories - - Dissertations

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