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Abstract:
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The paper begins by providing a brief overview and discussion of the modern
economics of organization, concentrating in particular on the work of incomplete
contract theorists. I then turn to a discussion of Loasby’s view of the firm and
incomplete contracts. The point here is that while Loasby begins from the same
recognition as modern incomplete theorists, that contractual incompleteness is a
necessary component of a theory of the firm, the causes and consequences of
contractual incompleteness are widely different. Thus, Loasby sees incompleteness
as a distinct virtue because it allows for organizational learning, whereas
incompleteness in the modern economics of organization is seen as a distinct
problem because it opens the door to incentive conflicts. I end by speculating on
how Loasby’s non-mainstream ideas on economic organization may be related to
some relatively mainstream ideas about alternative gameforms and real options. |
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