A Formal Haggling Theory of Firm Boundaries : A Trade-Off Between Bargaining Costs and Too Much Intervention

This study aims to provide a formal haggling theory of firm boundaries. In the face of unforeseen disturbances in trade circumstances, trading parties engage in ex post contract renegotiation, which ends with either agreement, disagreement, or third-party intervention. Given that the third-party intervention under integration (i.e., fiat) is more efficient than that under non-integration (i.e., court ordering), I show that integration can economize bargaining costs but suffers from too much intervention. This trade-off provides a formal explanation why selective intervention fails

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Year of publication:	2016
Authors:	Mori, Yusuke
Publisher:	[2016]: [S.l.] : SSRN
Subject:	Theorie der Unternehmung \| Theory of the firm \| Verhandlungen \| Negotiations \| Transaktionskosten \| Transaction costs

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