Reference Points and the Theory of the Firm
In this article I argue that it has been hard to make progress on Coase's theory of the firm agenda because of the difficulty of formalizing haggling costs. I propose an approach that tries to move things forward using the idea of aggrievement costs, and apply it to the question of whether a transaction should be placed inside a firm (in-house production) or in the market place (outsourcing).
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Copy CitationOliver D. Hart, "Reference Points and the Theory of the Firm," NBER Working Paper 13481 (2007), https://doi.org/10.3386/w13481.
Published Versions
Oliver Hart, 2008. "Economica Coase Lecture Reference Points and the Theory of the Firm," Economica, London School of Economics and Political Science, vol. 75(299), pages 404-411, 08.
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