Emprical contributions to the theory of the firm

In 1937, Ronald Coase proposed that the cost of transacting between producers and suppliers will determine the economic organisation of a firm. From this original insight, and further refinements, an important stream of literature developed providing the foundations for transaction-cost economics, principal-agent theory, and risk analysis as it relates to contract design. From these theoretical foundations, a body of empirical work has tested the predictions of Coase's original assertions. This article documents key empirical contributions to identifying the institutional and statistical determinants of optimal contract design and the choice of economic organisation.