Four Formal(Izable) Theories of the Firm?

65 Pages Posted: 28 Sep 2004

See all articles by Robert S. Gibbons

Robert S. Gibbons

Massachusetts Institute of Technology - Sloan School and Department of Economics; National Bureau of Economic Research (NBER)

Date Written: September 16, 2004

Abstract

In this essay, I define and compare elemental versions of four theories of the firm. These elemental theories are distilled from important contributions by Hart, Holmstrom, Klein, Williamson, and others. Although these contributions have been widely cited and much discussed, I have found it difficult to understand the commonalities, distinctions, and potential combinations of these seemingly familiar contributions. In this essay, therefore, I attempt to clarify these issues, in three steps: I begin with informal summaries of the theories, then turn to simple but formal statements of each elemental theory, and finally nest the four elemental theories in an integrative framework.

Keywords: Theory of the firm, rent seeking, property rights, adaptation

JEL Classification: D23, L22

Suggested Citation

Gibbons, Robert S., Four Formal(Izable) Theories of the Firm? (September 16, 2004). MIT Department of Economics Working Paper No. 04-34. Available at SSRN: https://ssrn.com/abstract=596864 or http://dx.doi.org/10.2139/ssrn.596864

Robert S. Gibbons (Contact Author)

Massachusetts Institute of Technology - Sloan School and Department of Economics ( email )

E52-432
MIT
Cambridge, MA 02142
United States
617-253-0283 (Phone)
617-258-6855 (Fax)

National Bureau of Economic Research (NBER)

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