TY  - JOUR
AU  - Rajan,Raghuram G.
AU  - Zingales,Luigi
TI  - Power in a Theory of the Firm
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6274
PY  - 1997
Y2  - November 1997
UR  - http://www.nber.org/papers/w6274
L1  - http://www.nber.org/papers/w6274.pdf
N1  - Author contact info:
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu

Luigi Zingales
Booth School of Business
The University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-3196
Fax: 773/834-2081
E-Mail: luigi.zingales@ChicagoBooth.edu
AB  - Transactions take place in the firm rather than in the market because the firm offers agents" who make specific investments power.  Past literature emphasizes the allocation of ownership as the" primary mechanism by which the firm does this.  Within the contractibility assumptions of this" literature, we identify a potentially superior mechanism, the regulation of access to critical resources. " Access can be better than ownership because: i) the power agents get from access is more contingent" on them making the right investment; ii) ownership has adverse effects on the incentive to specialize. " The theory explains the importance of internal organization and third party ownership.     "
ER  -