*This paper is based on the inaugural Coase Lecture, presented at the London School of Economics in February 2007.
Economica Coase Lecture: Reference Points and the Theory of the Firm
Article first published online: 20 FEB 2008
© The London School of Economics and Political Science 2008
Volume 75, Issue 299, pages 404–411, August 2008
How to Cite
HART, O. (2008), Economica Coase Lecture: Reference Points and the Theory of the Firm. Economica, 75: 404–411. doi: 10.1111/j.1468-0335.2007.00659.x
- Issue published online: 16 JUL 2008
- Article first published online: 20 FEB 2008
- Final version received 11 September 2007.
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).