Reference Points and the Theory of the Firm

17 Pages Posted: 15 Oct 2007 Last revised: 11 Dec 2007

See all articles by Oliver Hart

Oliver Hart

Harvard University - Department of Economics; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI)

Date Written: October 2007

Abstract

In this article I argue that it has been hard to make progress on Coase's theory of the firm agenda because of the difficulty of formalizing haggling costs. I propose an approach that tries to move things forward using the idea of aggrievement costs, and apply it to the question of whether a transaction should be placed inside a firm (in-house production) or in the market place (outsourcing).

Suggested Citation

Hart, Oliver D., Reference Points and the Theory of the Firm (October 2007). NBER Working Paper No. w13481, Available at SSRN: https://ssrn.com/abstract=1020907

Oliver D. Hart (Contact Author)

Harvard University - Department of Economics ( email )

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