PAM_334_Fall_2008_Lecture_2 - PAM3340 Lecture2 Agenda

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PAM 3340 Lecture 2 Agenda Institutional survival and evolution Law  versus  legislation Definition of the corporation Costs of the corporate form
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Recall: Institutions are defined by a set of  property rights and contractual  arrangements Firms exist to conserve on transactions  costs (3 categories) A variety of different types of firms Firms types compete and evolve
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Institutional Evolution Institutions  evolve  through a long  process of  competition  and rivalry (just  like products compete) The variety of arrangements (contracts)  surrounding the corporation are the  result of a long period of evolution
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Law  versus  legislation Law/legislation often conflated Law  is the result of a slow process of  evolution in dispute resolution Courts build up case law based on  decades of decisions relating to property,  contracts, torts Social norms/customs play a role in  enforcing law
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Law  versus  legislation Legislation:  rules created by a  legislature, signed by executive Legal penalties for violation No sense that rules evolved Structure of corporation formed by  law affected by  legislation  (e.g. SOX) See Hayek
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Definition of the Corporation  Focus on the large, open  corporation, with numerous owners  What distinguishes the corporation  from other organizational forms?
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Definition of the Corporation (continued)
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This document was uploaded on 10/26/2011 for the course PAM 3340 at Cornell University (Engineering School).

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PAM_334_Fall_2008_Lecture_2 - PAM3340 Lecture2 Agenda

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