Abstract
This paper considers the role of opportunism in three contractual theories of the firm: rent-seeking theory, property rights theory, and agency theory. In each case I examine whether it is possible to have a functioning contractual theory of the firm without recourse to opportunism. Without opportunism firms may still exist as a result of issues arising from (incomplete) contracting. Far from posing a problem for the theory of the firm, questioning the role of opportunism and the ubiquity of the hold-up problem helps us understand more about the purpose and functions of contracts which go beyond mere incentive alignment.
| Original language | English |
|---|---|
| Pages (from-to) | 479-501 |
| Number of pages | 23 |
| Journal | Journal of Institutional and Theoretical Economics |
| Volume | 166 |
| Issue number | 3 |
| Publication status | Published - Sept 2010 |
Keywords
- opportunism
- contractual theories of the firm
- rent-seeking theory
- property rights theory
- agency theory
- functioning contractual theory