Firms, Contracts, and Financial Structure¶
Hart, O. (1995). Firms, Contracts, and Financial Structure. Oxford University Press.
Cited by¶
5 citations across 5 artifacts.
Each citation links to the sentence it supports in the citing article.
Primes¶
- Incomplete Contract
- The theory's central move is the prime's designated gap-handler: ownership is defined as residual control rights, the authority to decide whatever the contract left open.
This sourceProperty-rights theory of the firm tying ownership to residual control rights over incomplete contracts, with the verifiability gap as the reason gaps cannot be closed.
- The theory's central move is the prime's designated gap-handler: ownership is defined as residual control rights, the authority to decide whatever the contract left open.
- Mandatory vs. Default Norms
- Hart (1995), in his theory of incomplete contracts and residual control rights, formalizes precisely this trade-off: because no contract can foresee all contingencies, the architecture of mandatory rules and gap-filling defaults determines which party bears the residual risk of unforeseen circumstances and how flexibly the relationship can adapt.
This sourceDevelops the theory of incomplete contracts and residual control rights: because no contract can foresee all contingencies, the architecture of mandatory rules and gap-filling defaults determines who bears residual risk and how flexibly the relationship adapts.
- Hart (1995), in his theory of incomplete contracts and residual control rights, formalizes precisely this trade-off: because no contract can foresee all contingencies, the architecture of mandatory rules and gap-filling defaults determines which party bears the residual risk of unforeseen circumstances and how flexibly the relationship can adapt.
- Transaction Costs
- In development economics, transaction-cost analysis structures understanding of why property rights, contract enforcement, and financial-market infrastructure are so important for growth (
This sourceDevelops the theory of incomplete contracts and residual control rights: because no contract can foresee all contingencies, the architecture of mandatory rules and gap-filling defaults determines who bears residual risk and how flexibly the relationship adapts.
- In development economics, transaction-cost analysis structures understanding of why property rights, contract enforcement, and financial-market infrastructure are so important for growth (
Mechanisms¶
- Performance Contract
- It can only bind what was foreseen and written
This sourceExplains that contracts cannot specify every contingency in advance and therefore leave residual discretion over contractual gaps.
- It can only bind what was foreseen and written
- Principal–Agent Contracting
- Its failure modes trace to incomplete contracts
This sourceExplains incomplete contracting as the inability to describe all future contingencies in a contract.
- Its failure modes trace to incomplete contracts
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