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The Firm as a Multicontact Organization

Author

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  • Laffont, J.J.
  • Martimort, D.

Abstract

The firm is often considered as a nexus of contracts linking the management and its different stakeholders: claim-holders, workers, unions, customers, suppliers, and the state, among others. This paper surveys recent work in contract theory, the multiprincipal incentive theory, and the theory of side contracts, which provides some insights into the structure of those contracts and therefore into the structure of the firm. First, we discuss the incomplete contracting assumptions underlying these variations of the usual grand contract approach. Second, we explain how the theoretical lessons learned from this work-the distribution of contracting rights, the power of incentive schemes within organizations, and the design of communication channels-apply to the theory of the firm. Copyright (c) 1997 Massachusetts Institute of Technology.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Laffont, J.J. & Martimort, D., 1996. "The Firm as a Multicontact Organization," Papers 95.390, Toulouse - GREMAQ.
  • Handle: RePEc:fth:gremaq:95.390
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    Cited by:

    1. Milton Harris & Artur Raviv, 2002. "Organization Design," Management Science, INFORMS, vol. 48(7), pages 852-865, July.
    2. Dur, Robert & Roelfsema, Hein, 2010. "Social exchange and common agency in organizations," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 39(1), pages 55-63, January.
    3. Antoine Faure-Grimaud & Jean-Jacques Laffont & David Martimort, 2000. "A Theory of Supervision with Endogenous Transaction Costs," Annals of Economics and Finance, Society for AEF, vol. 1(2), pages 231-263, November.
    4. Esther Gal-Or, 1997. "Multiprincipal Agency Relationships as Implied by Product Market Competition," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 6(1), pages 235-256, June.
    5. Martimort David & Stole Lars, 2003. "Contractual Externalities and Common Agency Equilibria," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 3(1), pages 1-40, July.
    6. Faure-Grimaud Antoine & Laffont Jean-Jacques & Martimort David, 2003. "Risk Averse Supervisors and the Efficiency of Collusion," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 2(1), pages 1-32, January.
    7. Michael Dietrich & Jackie Krafft & Jacques-Laurent Ravix, 2008. "Regulation and governance of the firm," Post-Print hal-00203479, HAL.
    8. Jackie Krafft & Jacques-Laurent Ravix, 2005. "The governance of innovative firms: An evolutionary perspective," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 14(3), pages 125-147.
    9. Bickenbach, Frank, 1999. "Regulierung und Wettbewerb im Bereich der Netzinfrastrukturen: Begründung, Regeln und Institutionen," Kiel Working Papers 910, Kiel Institute for the World Economy (IfW).
    10. Hongbin Cai & Walter Cont, 2004. "Agency Problems and Commitment in Delegated Bargaining," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(4), pages 703-729, December.
    11. Cecile Cezanne-Sintes, 2008. "Modern corporate changes: reinstating the link between the nature, boundaries and governance of the firm," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(4), pages 447-461.
    12. Bickenbach, Frank, 2000. "Regulation of Europe's network industries: the perspective of the new economic theory of federalism," Kiel Working Papers 977, Kiel Institute for the World Economy (IfW).
    13. Caroline Stiel, 2017. "Modern Public Enterprises: Organisational Innovation and Productivity," Discussion Papers of DIW Berlin 1713, DIW Berlin, German Institute for Economic Research.
    14. Walter A Cont, 2001. "Essays on Contract Design: Delegation and Agency Problems, and Monitoring Under Collusion," Levine's Working Paper Archive 625018000000000122, David K. Levine.
    15. Florence Busson-Villa, 2000. "La Gestion Des Risques Dans Les Communes," Post-Print halshs-00587433, HAL.
    16. Martimort, David, 1996. "The multiprincipal nature of government," European Economic Review, Elsevier, vol. 40(3-5), pages 673-685, April.
    17. Yuri Gorbaneff & Sergio Torres & José Fernando Cardona, 2009. "El concepto de incentivo en administración. Una revisión de la literatura," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 11(21), pages 73-91, July-Dece.
    18. Versaevel, Bruno & de Villemeur, Étienne, 2003. "Conflict and Cooperation on R&D Markets," IDEI Working Papers 191, Institut d'Économie Industrielle (IDEI), Toulouse.
    19. Son Ku Kim & Keunkwan Ryu, 2001. "Joint Determination of Internal Organizational Design: Decision-Making, Task Allocation, and Incentive Scheme," ISER Discussion Paper 0550, Institute of Social and Economic Research, Osaka University.

    More about this item

    Keywords

    CONTRACTS; MANAGEMENT; CORPORATIONS; SHAREHOLDERS;

    JEL classification:

    • K10 - Law and Economics - - Basic Areas of Law - - - General (Constitutional Law)
    • K12 - Law and Economics - - Basic Areas of Law - - - Contract Law
    • M10 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - General

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