ECO320Y5 Lecture Notes - Lecture 10: Cooperative Game Theory, Legal Personality, Royal Charter
Document Summary
Eco320 lecture 10: firms, corporations and insider trading. If transa(cid:272)tion (cid:272)osts are high, there"s less likely to (cid:271)e a (cid:272)ontra(cid:272)t. If a wholly owned firm is managed by the owner, he will make operating decisions which maximize his utility. It may be less costly for the partners to internalize their incentives inside a corporation (new legal entity) than to incur the transaction costs of contracts: If you put everything in a cooperation - making them liable. Royal prerogative to grant corporate charters statute of monopolies 1600s.
