The Impact of Incomplete Contracts on Economics
Published on 18. February 2016
Book
Hardback
440 pages
978-0-19-982622-3 (ISBN)
Description
The 1986 article by Grossman and Hart "A Theory of Vertical and Lateral Integration " has provided a framework for understanding how firm boundaries are defined and how they affect economic performance. The property rights approach has provided a formal way to introduce incomplete contracting ideas into economic modeling.
The Impact of Incomplete Contracts on Economics collects papers and opinion pieces on the impact that this property right approach to the firm has had on the economics profession. It shows that the impact has been felt sometimes in significant ways in a variety of fields, ranging from the theory of the firm and their internal organization to industrial organization, international trade, finance, management, public economy, and political economy and political science. Beyond acknowledging how the property rights approach has permeated economics as a whole, the contributions in the book also highlight the road ahead---how the paradigm may change the way research is performed in some of the fields, and what type of research is still missing. The book concludes with a discussion of the foundations of the property rights, and more generally the incomplete contracting, approaches and with a series of contributions showing how behavioral considerations may provide a new way forward.
The Impact of Incomplete Contracts on Economics collects papers and opinion pieces on the impact that this property right approach to the firm has had on the economics profession. It shows that the impact has been felt sometimes in significant ways in a variety of fields, ranging from the theory of the firm and their internal organization to industrial organization, international trade, finance, management, public economy, and political economy and political science. Beyond acknowledging how the property rights approach has permeated economics as a whole, the contributions in the book also highlight the road ahead---how the paradigm may change the way research is performed in some of the fields, and what type of research is still missing. The book concludes with a discussion of the foundations of the property rights, and more generally the incomplete contracting, approaches and with a series of contributions showing how behavioral considerations may provide a new way forward.
Reviews / Votes
"The contributions in this collection constitute a most worthy celebration of Grossman and Hart's classic paper on incomplete contracting and its deep and wide-ranging impact on economics and beyond."-- Bengt Holmstrom, Paul A. Samuelson Professor of Economics, M.I.T
"The Grossman -Hart incomplete contracts approach represents perhaps the most influential advance in economic theory in the last 30 years. This book assembles many of the remarkable offspring of this truly seminal contribution."
-- Andrei Shleifer, Professor of Economics, Harvard University
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Philippe Aghion | Mathias Dewatripont | Patrick Legros
The Impact of Incomplete Contracts on Economics
Book
02/2016
Oxford University Press Inc
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Philippe Aghion | Mathias Dewatripont | Patrick Legros
The Impact of Incomplete Contracts on Economics
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Persons
Philippe Aghion is the Robert C. Waggoner Professor of Economics at Harvard University and a fellow of the Econometric Society and of the American Academy of Arts and Sciences. His research focuses on the economics of growth. With Peter Howitt, he pioneered the so-called Schumpeterian Growth paradigm which was subsequently used to analyze the design of growth policies and the role of the state in the growth process. In 2001, Philippe Aghion received the Yrjo Jahnsson Award of the best European economist under age 45.
Mathias Dewatripont is Director of the National Bank of Belgium and Professor of Economnics at the Universite libre de Bruxelles.
Patrick Legros studied in France and in the US and started his career at Cornell University. He is currently Full Professor of Economics at the Universite libre de Bruxelles in Belgium and a fellow of its research center ECARES. His main current research interests are the development of an "Organizational Industrial Organization ", for which he receives an ERC Advanced Grant and the design of re-matching (like affirmative action) policies in the presence of rigidities in the allocation of surplus in schools or firms. He is currently the managing editor of the Journal of Industrial Economics and a member of the European Advisory Group on Competition Policy at the European Commission.
Luigi Zingales' research interests span from corporate governance to financial development, from political economy to the economic effects of culture. Currently, he has been involved in developing the best interventions to cope with the aftermath of the financial crisis. He also co-developed the Financial Trust Index, which is designed to monitor the level of trust that Americans have toward their financial system. In addition to holding his position at Chicago Booth, Zingales is currently a faculty research fellow for the National Bureau of Economic Research, a research fellow for the Center for Economic Policy Research, and a fellow of the European Governance Institute. He is also the director of the American Finance Association and an editorialist for Il Sole 24 Ore, the Italian equivalent of the Financial Times. Zingales also serves on the Committee on Capital Markets Regulation, which has been examining the legislative, regulatory, and legal issues affecting how public companies function.
Mathias Dewatripont is Director of the National Bank of Belgium and Professor of Economnics at the Universite libre de Bruxelles.
Patrick Legros studied in France and in the US and started his career at Cornell University. He is currently Full Professor of Economics at the Universite libre de Bruxelles in Belgium and a fellow of its research center ECARES. His main current research interests are the development of an "Organizational Industrial Organization ", for which he receives an ERC Advanced Grant and the design of re-matching (like affirmative action) policies in the presence of rigidities in the allocation of surplus in schools or firms. He is currently the managing editor of the Journal of Industrial Economics and a member of the European Advisory Group on Competition Policy at the European Commission.
Luigi Zingales' research interests span from corporate governance to financial development, from political economy to the economic effects of culture. Currently, he has been involved in developing the best interventions to cope with the aftermath of the financial crisis. He also co-developed the Financial Trust Index, which is designed to monitor the level of trust that Americans have toward their financial system. In addition to holding his position at Chicago Booth, Zingales is currently a faculty research fellow for the National Bureau of Economic Research, a research fellow for the Center for Economic Policy Research, and a fellow of the European Governance Institute. He is also the director of the American Finance Association and an editorialist for Il Sole 24 Ore, the Italian equivalent of the Financial Times. Zingales also serves on the Committee on Capital Markets Regulation, which has been examining the legislative, regulatory, and legal issues affecting how public companies function.
Editor
Robert C. Waggoner Professor of EconomicsRobert C. Waggoner Professor of Economics, Harvard University
DirectorDirector, Banque Nationale de Belgique
Full Professor of EconomicsFull Professor of Economics, Universiti Libre de Bruxelles (ECARES)
Robert C. McCormack Professor of Entrepreneurship and FinanceRobert C. McCormack Professor of Entrepreneurship and Finance, Booth School of Business, University of Chicago
Content
PART 1: Perspectives on Grossman and Hart 1986 ; (1) Introductory Remarks on Grossman and Hart, JPE, 1986 ; John Moore (University of Edinburgh) ; (2) Grossman-Hart (1986) as a Theory of Markets ; Bengt Holmstrom (MIT) ; (3) Remarks on Incomplete Contracting ; Jean Tirole (Toulouse School of Economics) ; (4) Property Rights and Transaction Cost Theories ; Steven Tadelis (University of California-Berkeley and eBay Research Labs) ; (5) Grossman and Hart (1986) and Applied Theory ; Thomas Hubbard (Kellogg School of Management, Northwestern University) ; PART 2: Incomplete Contracts and Firm Boundaries ; (6) Incomplete Contracts and Firm Boundaries: New Directions ; Wouter Dessein (Columbia University) ; (7) Discussion of Wouter Dessein's <"Incomplete Contracts and Firm Boundaries: New Directions>" ; Francine Lafontaine (University of Michigan) ; (8) Comment on <"Incomplete contracts and Firm Boundaries: New Directions>" by Wouter Dessein ; Michael D. Whinston (MIT) ; PART 3: Incomplete Contracts and Internal Organization ; (9) Incomplete Contracts and the Internal Organization of Firms ; Phillipe Aghion (Harvard University), Nicholas Bloom (Stanford University), John Van Reenen (London School of Economics) ; (10) Comments on Aghion, Bloom and Van Reenen <"Incomplete Contracts and the Internal Organization of Firms,>" P. ; John Roberts (Stanford University) ; (11) The Empirical Implications of the Grossman-Hart Model: Comments on <"Incomplete Contracts an the Internal Organization of Firms,>" by P. Aghion, N. Bloom and J. Van Reenen ; W. Bentley McLeod (Columbia University) ; PART 4: Incomplete Contracts and Corporate Finance ; (12) Corporate Finance, Incomplete Contracts, and Corporate Control ; Patrick Bolton (Columbia University) ; (13) Discussion of Patrick Bolton's <"Corporate Finance, Incomplete Contracts, and Corporate Control>" ; Efraim Benmelech (Kellogg School of Management, Northwestern University) ; (14) Why Incomplete Contract is Important for Finance ; Luigi Zingales (The University of Chicago Booth School of Business) ; PART 5: Incomplete Contracts and Business Firms ; (15) Oliver Hart's Contributions to the Understanding of Strategic Alliances and Technology Licensing ; Josh Lerner (Harvard University) ; (16) Incomplete Contracts and Venture Capital ; Steve Kaplan (The University of Chicago Booth School of Business) ; (17) Incomplete Contracts and the Role of Small Firms ; Jeremy C. Stein (Harvard University) ; PART 6: Incomplete Contracts and Industrial Organization ; (18) Contracts, Ownership and Industrial Organization: Past and Future ; Patrick Legros (Universite libre de Bruxelles) and Andrew F. Newman (Boston University) ; (19) Discussion of <"Contracts, Ownership and Industrial Organization: Past and Future>", by Patrick Legros and Andrew Newman ; Mathias Dewatripont (Universite libre de Bruxelles and National Bank of Belgium) ; (20) Discussion of <"Contracts, Ownership and Industrial Organization: Past and Future>", by Patrick Legros and Andrew Newman ; Kai-Uwe Kuhn (University of Michigan) ; PART 7: Incomplete Contracts and International Trade ; (21) Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production ; Pol Antras (Harvard University) ; (22) Comment on Pol Antras: <"Grossman-Hart (1986) Goes Global: Incomplete Contracts, Property Rights, and the International Organization of Production>" ; Elhanan Helpman (Harvard University) ; (23) The Theory of the Firm Goes Global ; Dalia Marin (University of Munich) ; PART 8: Incomplete Contracts and Public Ownership ; (24) Incomplete Contracts and Not for Profit Firms ; Paul Grout (University of Bristol) ; (25) Firm Ownership: The Legacy of Grossman and Hart ; Henry Hansmann (Yale Law School) ; (26) Ex-Ante Anonymity and Government Allocation of Property Rights ; Rohan Pitchford (Australian National University) ; PART 9: Incomplete Contracts and Political Economy ; (27) International Treaties as Incomplete Contracts ; Bard Harstad (University of Oslo) ; (28) Incomplete Contracts and Political Economy ; Gerard Roland (University of Berkeley) ; (29) Incomplete Contracts and the Design of Constitutions ; Guido Tabellini (Bocconi University) ; PART 10: Incomplete Contracts, Mechanism Design and Complexity ; (30) Comments on the Foundations of Incomplete Contracts ; Eric Maskin (Harvard University) ; (31) Comments on the Foundations of Incomplete Contracts ; John Moore (University of Edinburgh) ; (32) Incomplete Contracts and Mechanism Design ; Richard Holden (University of New South Wales) ; (33) Complexity and Undescribability ; Nabil I. Al-Najjar (Nothwestern University), Luca Anderlini (Georgetown University), and Leonardo Felli (London School of Economics) ; PART 11: Incomplete Contracts, Reference Points and Communication ; (34) New Directions of Incomplete Contracts: Reference Points, Communication, and Renegotiation ; Christian Zehnder (University of Lausanne) ; (35) Some Recent Experimental Evidence on Contracts as Reference Points ; Klaus Schmidt (University of Munich) ; (36) Incomplete Contracting in the Field ; Antoinette Schoar (Harvard University)