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Cover of: Opportunism, Hold-Up and the (Contractual) Theory of the Firm
James H. Love

Opportunism, Hold-Up and the (Contractual) Theory of the Firm

Section: Articles
Volume 166 (2010) / Issue 3, pp. 479-501 (23)
Published 09.07.2018
DOI 10.1628/093245610793102125
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Summary
This paper considers the role of opportunism in three contractual theories of the firm: rent-seeking theory, property rights theory, and agency theory. In each case I examine whether it is possible to have a functioning contractual theory of the firm without recourse to opportunism. Without opportunism firms may still exist as a result of issues arising from (incomplete) contracting. Far from posing a problem for the theory of the firm, questioning the role of opportunism and the ubiquity of the hold-up problem helps us understand more about the purpose and functions of contracts which go beyond mere incentive alignment.