Resource title

Incomplete Contracts and Economic Organization - Brian Loasby and the Theory of the Firm

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Resource description

The paper begins by providing a brief overview and discussion of the moderneconomics of organization, concentrating in particular on the work of incompletecontract theorists. I then turn to a discussion of Loasby’s view of the firm andincomplete contracts. The point here is that while Loasby begins from the samerecognition as modern incomplete theorists, that contractual incompleteness is anecessary component of a theory of the firm, the causes and consequences ofcontractual incompleteness are widely different. Thus, Loasby sees incompletenessas a distinct virtue because it allows for organizational learning, whereasincompleteness in the modern economics of organization is seen as a distinctproblem because it opens the door to incentive conflicts. I end by speculating onhow Loasby’s non-mainstream ideas on economic organization may be related tosome relatively mainstream ideas about alternative gameforms and real options.

Resource author

Nicolai J. Foss

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Resource language

eng

Resource content type

application/pdf

Resource resource URL

http://hdl.handle.net/10398/8112

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