Access

You are not currently logged in.

Access JSTOR through your library or other institution:

login

Log in through your institution.

If You Use a Screen Reader

This content is available through Read Online (Free) program, which relies on page scans. Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Journal Article

Property Rights and the Nature of the Firm

Oliver Hart and John Moore
Journal of Political Economy
Vol. 98, No. 6 (Dec., 1990), pp. 1119-1158
Stable URL: http://www.jstor.org/stable/2937753
Page Count: 40
  • Read Online (Free)
  • Download ($14.00)
  • Subscribe ($19.50)
  • Add to My Lists
  • Cite this Item
Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Property Rights and the Nature of the Firm
Preview not available

Abstract

This paper provides a framework for addressing the question of when transactions should be carried out within a firm and when through the market. Following Grossman and Hart, we identify a firm with the assets that its owners control. We argue that the crucial difference for party 1 between owning a firm (integration) and contracting for a service from another party 2 who owns this firm (nonintegration) is that, under integration, party 1 can selectively fire the workers of the firm (including party 2), whereas under nonintegration he can "fire" (i.e., stop dealing with) only the entire firm: the combination of party 2, the workers, and the firm's assets. We use this idea to study how changes in ownership affect the incentives of employees as well as those of owner-managers. Our framework is broad enough to encompass more general control structures than simple ownership: for example, partnerships and worker and consumer cooperatives all emerge as speical cases.

Page Thumbnails

  • Thumbnail: Page 
1119
    1119
  • Thumbnail: Page 
1120
    1120
  • Thumbnail: Page 
1121
    1121
  • Thumbnail: Page 
1122
    1122
  • Thumbnail: Page 
1123
    1123
  • Thumbnail: Page 
1124
    1124
  • Thumbnail: Page 
1125
    1125
  • Thumbnail: Page 
1126
    1126
  • Thumbnail: Page 
1127
    1127
  • Thumbnail: Page 
1128
    1128
  • Thumbnail: Page 
1129
    1129
  • Thumbnail: Page 
1130
    1130
  • Thumbnail: Page 
1131
    1131
  • Thumbnail: Page 
1132
    1132
  • Thumbnail: Page 
1133
    1133
  • Thumbnail: Page 
1134
    1134
  • Thumbnail: Page 
1135
    1135
  • Thumbnail: Page 
1136
    1136
  • Thumbnail: Page 
1137
    1137
  • Thumbnail: Page 
1138
    1138
  • Thumbnail: Page 
1139
    1139
  • Thumbnail: Page 
1140
    1140
  • Thumbnail: Page 
1141
    1141
  • Thumbnail: Page 
1142
    1142
  • Thumbnail: Page 
1143
    1143
  • Thumbnail: Page 
1144
    1144
  • Thumbnail: Page 
1145
    1145
  • Thumbnail: Page 
[1146]
    [1146]
  • Thumbnail: Page 
1147
    1147
  • Thumbnail: Page 
1148
    1148
  • Thumbnail: Page 
1149
    1149
  • Thumbnail: Page 
1150
    1150
  • Thumbnail: Page 
1151
    1151
  • Thumbnail: Page 
1152
    1152
  • Thumbnail: Page 
1153
    1153
  • Thumbnail: Page 
1154
    1154
  • Thumbnail: Page 
1155
    1155
  • Thumbnail: Page 
1156
    1156
  • Thumbnail: Page 
1157
    1157
  • Thumbnail: Page 
1158
    1158