We embed a simple incomplete-contracts model of organization design in a standard two-country perfectly-competitive trade model to examine how the liberalization of product and factor markets affects the ownership structure of firms. In our model, managers decide whether or not to integrate...

The traditional theories of the firm leave no room for love in business organizations, perhaps because it is thought that love is only an emotion or feeling, not a virtue, or because economic efficiency and profit making are considered to be incompatible with the practice of charity or love. In...

A basic worldview of economic theory is the notion that humans have unlimited material wants and limited means to satisfy these wants. In this framework the task of economists is to design policy instruments to meet human preferences for material commodities as efficiently as possible, that is,...

The purpose of this chapter is to provide an extended overview on the debate on the European firm, by articulating it against the backdrop of more traditional theories of the firm. The chapter also proposes a different interpretation of the issue by grafting the discussion into the...

The fundamental contribution of the institutional economics and transaction costs economics to the science of economics is considered to be the comparative analysis of the institutional arrangements.

This Paper surveys the theoretical literature on the effect of soft budget constraints (SBC) on economies in transition from centralization to capitalism; it also reviews our understanding of SBC in general. It focuses on the conception of the SBC syndrome as a commitment problem. We show that...