Surplus, Contractibility and Theory of the Firm
International Journal of Economic Behavior and Organization
Volume 6, Issue 1, March 2018, Pages: 1-10
Received: Dec. 24, 2017; Accepted: Jan. 10, 2018; Published: Jan. 26, 2018
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Author
Zhongwei Wu, Seix Investment Advisors LLC, Park Ridge, USA
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Abstract
A theory of the firm is advanced as a unified property rights for surplus created by cooperative activity. This differs from traditional transaction cost literature which views the firm as a governance structure. Individual purposive entities act in their own interests, within or without a firm. Only contractible inputs are coordinated for joint surplus maximization. Each party determines her non-contractible inputs for her own benefits, which explain many observed firm phenomena. An equilibrium models are developed for the firm and used to explain the questions of firm existence, boundary, and ownership.
Keywords
Firm, Surplus, Contractibility, Equilibrium
To cite this article
Zhongwei Wu, Surplus, Contractibility and Theory of the Firm, International Journal of Economic Behavior and Organization. Vol. 6, No. 1, 2018, pp. 1-10. doi: 10.11648/j.ijebo.20180601.11
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Copyright © 2018 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0/) which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
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