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The Firm as an Institution: Recent Evolution in the Contractual Perspective

Published online by Cambridge University Press:  17 August 2016

Liliana Basile  and
Paola Casavola
Liliana Basile
Affiliation:
University of Naples
Paola Casavola
Affiliation:
Banco d'ltalia
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Summary

The aim of this paper is to clarify the connection between types of firms and types of assumptions about the information structure. Building on the role of information structure, notions of the firm as an organisation have been put forward which suggest that the firm can assume an alternative (to the market) coordinating role in conditions of contractual incompleteness. A comparison (and opposition) between two recent approaches to the theory of the firm as an organisation seems to suggest that different notions of incomplete contracts imply substantial differences in terms of the meaning of a Pareto-efficiency improvement, of the role to assign to vertical integration, and of the determinants of the dimension of the firm.

Résumé

Résumé

Le but de cet article est de clarifier le lien existant entre types de firmes et types d'hypothèses sur la structure de l'information. A partir de cette dernière, on a avancé l'idée que la firme pouvait constituer une alternative au marché pour la coordination quand les contrats sont incomplets. Une comparaison (et une mise en opposition) entre les deux approches récentes de la théorie de la firme comme organisation semble suggérer que des notions différentes de contrats incomplets impliquent des différences substantielles dans la signification des gains d'efficacité parétienne et du rôle à donner à l'intégration verticale, ainsi qu'aux déterminants de la taille de la firme.

Keywords

D23D23
Type
Research Article
Information
Recherches Économiques de Louvain/ Louvain Economic Review , Volume 60 , Issue 2 , June 1994 , pp. 249 - 270
Copyright
Copyright © Université catholique de Louvain, Institut de recherches économiques et sociales 1994 

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Footnotes

(*)

We would like to thank Richard Arena, Fabrizio Barca, Maurizio Franzini, Ugo Pagano, Bob Rowthorn, Neri Salvadori, Christian Schmidt and the participants at the Pittsburgh Convention of the Eastern Economic Association, 15-17 March 1991, the Marseille Conference “L’Institutionnalisme en Question”, 19-20 September 1991, and the Siena Workshop “Istituzioni, Crescita e Sviluppo Economico”, 1-3 October 1992, for valuable discussions on earlier drafts. We would particularly like to thank the anonymous referees of this Journal for their detailed reports on a previous version of the paper. Financial support from CNR and MURST is gratefully akwnoledged. The opinions expressed remain our own responsibility.

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