The Right of Ownership and the Firm
Basically, the process of production can be organized in two ways. In the first, you might enter into a contractual agreement with one person to grow wheat on your land, with another to harvest it, with a third to store it, and with a fourth to sell it. This method of organizing production is called contracting across markets. You negotiate a separate agreement with contractual partners and pay each of them an agreed-upon sum of money in exchange for a specific performance.
KeywordsTransaction Cost Limited Liability Market Evaluation Equity Financing Business Firm
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