Firms, Contracts, and Financial Structure (Clarendon Lectures in Economics)
This work uses recent developments in the theory of incomplete contracts to analyze a range of topics in organization theory and corporate finance. Beginning with a general model of the firm, Hart analyzes in greater depth the financial structure of firms, debt collecting and bankruptcy. Oliver Hart is a leading researcher in this area, and these Clarendon Lectures are an important contribution to contact theory. The work will be of interest to teachers, graduate students and advanced students of microeconomics, the theory of the firm, industrial organization, and finance.
A classic on the theory of the firm
By Paul Walker - December 3, 2003
Consider an economic relationship where relationship-specific investments are important and transaction costs make it impossible to write a comprehensive long-term contract to govern the terms of the relationship. Consider also the nonhuman assets that, in the post-investment stage, make up this relationship. Given that the initial contract has gaps, missing provisions, or ambiguities, situations will occur in which some aspects of the use of these assets are not specified. Take the position that the right to choose these missing aspects of usage resides with the 'owner' of the asset. That is, ownership of an asset goes together with the possession of residual rights of control over that asset; the owner has the right to use the asset in any way not inconsistent with a prior contract, custom, or any law. Finally, identify a firm with all the nonhuman assets that belong to it, assets that the firms's owners possess by virtue of being owners of the firm. Included in this category are... read more
By marshall - March 7, 2012
I was not interested in any micro theory prior to reading this book. I felt many modern advances in micro theory is purely mathematicians' game, which has little relevance towards reality. That view changed first when I had the pleasure to learn contract theory from Hart. His immensely interesting lecture lured me into actually reading his book, from which his lecture draws and is as fascinating and lucid as his lecture. His explanation is very clear, and refers back to his canonical model of GM to illustrate how theory is relevant to reality. He demonstrates how contract theory answers some questions that neoclassical theory or any established theory could not answer. Another strength of this book and of Hart is that he is able to answer intriguing and important questions using simple mathematics--All the models presented are striped-down, with no unnecessary complications, and the core insight and intuition is not buried in messy complications. To conclude, this is a wonderful book... read more
A THEORY of the firm
By A Customer - March 25, 2000
This book presents a theory of the firm. It is targeted for graduate students in Economics. It is a must have if you plan to research in this field and it is remarkably clear! The mathematics is incredibly easy compared to other 2nd year Econ PhD books. I think even undergraduates usually know enough Math to go through the main chapters. The book is purely theoretical and only very abstract-minded people will like it. If your specialization is applied I.O. you still might want to read the book for background knowledge, but I doubt it will be of much use to you (no econometrics here, and very little econometrics to be done even if you wanted to)On the other hand, it is probably not going to be of any use to you if you are not a graduate student in Economics. It is *far* too abstract for management.Now briefly to the content: The first chapter reviews previous approaches to the theory of the firm (transaction costs...) Property right approach and incomplete contract... read more
Innovation processes and related spillovers are of eminent importance in a modern economy. How do they relate to spatial structures and environmental factors? The papers analyse innovation processes ...