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Is the Firm an Individual?


  • Khalil, Elias L


This paper shows how three new institutionalist theories try, but ultimately fail to support the firm-as-individual thesis. First, Karl Marx/O. Hart's idea of property rights and R. H. Coase/O. E. Williamson's notion of transaction costs are insufficient to substantiate the market/firm dichotomy. Second, F. A. Hayek's constructionist view presents the firm, as opposed to the market, as a designed order--no different from artifacts such as tables and cars. Third, V. J. Vanberg's constitutionalist theory also fails to support the firm-as-individual thesis. The paper suggests that the 'consented goal' notion is a fruitful ground upon which to build the firm-as-individual thesis. Copyright 1997 by Oxford University Press.

Suggested Citation

  • Khalil, Elias L, 1997. "Is the Firm an Individual?," Cambridge Journal of Economics, Oxford University Press, vol. 21(4), pages 519-544, July.
  • Handle: RePEc:oup:cambje:v:21:y:1997:i:4:p:519-44

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    References listed on IDEAS

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    2. Dutt, Amitava Krishna, 1984. "Stagnation, Income Distribution and Monopoly Power," Cambridge Journal of Economics, Oxford University Press, vol. 8(1), pages 25-40, March.
    3. Tarsila Segalla Afanasieff & Priscilla Maria Villa Lhacer & Márcio I. Nakane, 2002. "The Determinants of Bank Interest Spread in Brazil," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 183-207, July-Dece.
    4. Brock, Philip L. & Rojas Suarez, Liliana, 2000. "Understanding the behavior of bank spreads in Latin America," Journal of Development Economics, Elsevier, vol. 63(1), pages 113-134, October.
    5. Demirguc, Asli & Huizinga, Harry, 1999. "Determinants of Commercial Bank Interest Margins and Profitability: Some International Evidence," World Bank Economic Review, World Bank Group, vol. 13(2), pages 379-408, May.
    6. Aronovich, Selmo, 1994. "Uma nota sobre os efeitos da inflação e do nível de atividade sobre o spread bancário," Revista Brasileira de Economia - RBE, FGV/EPGE - Escola Brasileira de Economia e Finanças, Getulio Vargas Foundation (Brazil), vol. 48(1), January.
    7. Gilberto Tadeu Lima, 2000. "Market concentration and technological innovation in a dynamic model of growth and distribution," BNL Quarterly Review, Banca Nazionale del Lavoro, vol. 53(215), pages 447-475.
    8. Philip Arestis, 2002. "Financial crisis in Southeast Asia: dispelling illusion the Minskyan way," Cambridge Journal of Economics, Oxford University Press, vol. 26(2), pages 237-260, March.
    9. Steve Keen, 1995. "Finance and Economic Breakdown: Modeling Minsky’s “Financial Instability Hypothesis”," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 17(4), pages 607-635, July.
    10. Saunders, Anthony & Schumacher, Liliana, 2000. "The determinants of bank interest rate margins: an international study," Journal of International Money and Finance, Elsevier, vol. 19(6), pages 813-832, December.
    11. Carl Chiarella & Peter Flaschel & Willi Semmler, 2001. "The macrodynamics of debt deflation," Chapters,in: Financial Fragility and Investment in the Capitalist Economy, chapter 7 Edward Elgar Publishing.
    12. Stephen Rousseas, 1985. "A Markup Theory of Bank Loan Rates," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 8(1), pages 135-144, September.
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    14. Martin H. Wolfson, 1996. "A Post Keynesian Theory of Credit Rationing," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 18(3), pages 443-470, March.
    15. Antonio Meirelles & Gilberto Lima, 2006. "Debt, financial fragility, and economic growth: a Post Keynesian macromodel," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 29(1), pages 93-115.
    16. Angbazo, Lazarus, 1997. "Commercial bank net interest margins, default risk, interest-rate risk, and off-balance sheet banking," Journal of Banking & Finance, Elsevier, vol. 21(1), pages 55-87, January.
    17. Gilberto Tadeu Lima, 2004. "Endogenous Technological Innovation, Capital Accumulation And Distributional Dynamics," Metroeconomica, Wiley Blackwell, vol. 55(4), pages 386-408, November.
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    19. Domenico Delli Gatti & Mauro Gallegati, 1990. "Financial Instability, Income Distribution, and the Stock Market," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 12(3), pages 356-374, March.
    20. Foley, Duncan K., 1987. "Liquidity-profit rate cycles in a capitalist economy," Journal of Economic Behavior & Organization, Elsevier, vol. 8(3), pages 363-376, September.
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    Cited by:

    1. Elias Khalil, 1997. "Friedrich Hayek's Theory of Spontaneous Order: Two Problems," Constitutional Political Economy, Springer, vol. 8(4), pages 301-317, December.
    2. Elias Khalil, 1999. "Institutions, Naturalism and Evolution," Review of Political Economy, Taylor & Francis Journals, vol. 11(1), pages 61-81.
    3. Chassagnon, Virgile, 2012. "Une analyse historique de la nature juridique de la firme," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 12.
    4. Khalil, Elias L., 1999. "Two kinds of order: Thoughts on the theory of the firm," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 28(2), pages 157-173, July.
    5. Elias L. Khalil, 2012. "The One who Gives Too Early, Gives Twice: Cooperation, Blood Feuds and Third-Party Institutions," Monash Economics Working Papers 24-12, Monash University, Department of Economics.
    6. Robert Mulligan, 2006. "Accounting for the business cycle: Nominal rigidities, factor heterogeneity, and Austrian capital theory," The Review of Austrian Economics, Springer;Society for the Development of Austrian Economics, vol. 19(4), pages 311-336, December.
    7. Khalil, Elias L., 1998. "The five careers of the biological metaphor in economic theory," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 27(1), pages 29-52.
    8. Geoffrey Hodgson, 2002. "The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 9(1), pages 37-60.
    9. Elias Khalil, 2006. "Weakness Of Will," Monash Economics Working Papers 06/06, Monash University, Department of Economics.

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