The “Nature of the Firm” (together with Coase’s later paper, “The Problem of Social Cost”) has had an enormous influence on the development of research in the theory of organization . . . (Hart, 1988: 119) It is impossible to disagree with Hart’s assessment. Coasean ideas, not just in the papers cited by Hart, are embodied into the contract and organization literature. This influence stems in part from the fact that Coase’s theoretical framework resides within the context of mainstream economic thinking. This theoretical framework depends on the relationship between property rights and transaction costs, and because the standard neoclassical model emerges as a special case when rights are perfect, it was logical for Coase’s work to be accepted and used, compared to the work of earlier institutionalists. When combined with Coase’s yeoman methodological empiricism, it is understandable why his name will forever be attached to the economics of organization and contracts.
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