By Nick Szabo
Source: https://nakamotoinstitute.org/library/measuring-value/
introduction
An acquaintance does you a favor. How can you repay him and deepen the relationship at the same time? An investor asks to see the company's balance sheet. But what do those numbers mean? Can they really be trusted? The judge must award damages for the plaintiff's injuries. What monetary amount, if any, would be fair compensation for the plaintiff's injuries?
Human relationships and institutions, large and small, from the friendliest to the harshest, must grapple with this thorny problem of value: How can we safely discern what we want from what we don’t want, based on input from our ( not necessarily reliable) sensory systems? How can we know what other people want? Money , wage labor , markets, and many other economic institutions are what they are because this concrete form solves the problem of measuring value. The same problem is at the heart of the current accounting crisis.
Questions of value are inherently subjective and personal. Value is very different from objective phenomena in fields such as physics and chemistry. Societies have developed institutions such as firms and competitive markets to set prices, legal precedents and judicial procedures to make decisions, and so on. In turn, these institutions often rely on answering the second question - the subject of this article - how can we safely determine value from the phenomena we observe? We will examine "taxation" as a negative example of this measurement problem. The final part of this article will focus on a specific tool developed for measuring value - accounting - and argue how it may change to challenge the profound changes that are taking place in our economy and services.
Economic relations
In the 19th century, economists developed a theory of perfectly competitive markets for goods (now often called the "neoclassical model"). For example, the familiar supply and demand curves come from this theory. In an ideal market, the equal supply and demand produce a price that compensates for the relevant skills of all market participants and satisfies the preferences of all market participants. In such a market, the balance between the skills required to produce the good and the preferences for the good constitutes the good's price - and value can be measured by the market price equilibrium. Some modern markets, especially well-known ones such as commodity futures markets, have turned this ideal into reality. However, many other institutions, such as hierarchical firms, work very differently. And most modern markets are very recent. Even today, most economic relationships, such as those that occur within firms, are far from this ideal.
In a competitive market, one good is exchanged for another good. (Money is just one particularly interesting good.) In order for this market to work — in order for prices to accurately communicate value — the participants must first be able to measure the value of the two goods being exchanged. In fact, the participant's ability to measure value is an important ability to distinguish one good from another less economical good or service; specifically, the participant observes the characteristics of a good or service, compares what he or she observes to his or her personal preferences, and then ensures that he or she is not being deceived by dodgy merchants.
The competitive market model was so successful that modern economists have begun to look at economic institutions that we take for granted—such as the firm—and ask why they exist at all! They go back to explain all sorts of other economic relationships in terms of the very clear theory of competitive markets; these relationships are usually spelled out through property rights and contracts between parties. This school of thought is most often called the "transaction cost" school of economics, often also called the "new institutional economics" or the "property rights school." The idea of transaction costs was introduced by Nobel Prize-winning economist Ronald Coase. Prominent later figures include: Oliver Hart, Oliver Williamson, Steve Cheung, Yoram Barzel, Armen Alchian, Harold Demsetz, Janet Landa, Robert Ellickson, and many others.
By comparing various forms of contracts to idealized commodity markets, and reusing many of the same assumptions used by neoclassical economists (rational self-interested individuals, unique preferences, and unique skills), we can better understand other economic systems. The modern economy consists of a wide variety of business systems, with hierarchical corporations at one end and free competitive commodity markets at the other, and a wide range of different institutions and the contracts that support them in between.
When someone decides to start a new firm rather than become an employee of an existing one, we can think of that decision as a “vote” that the economy needs more market relations and fewer employee-employer relations. Conversely, when one firm acquires another, it implies that the economy needs fewer market relations and more intra-firm relations. Socialists saw the trend toward consolidation and the economies of scale in industrial capitalism and thought that the world would end up with just one giant firm, and decided that the government should run it. That turned out to be terrible. Others idealized a world without firms—where everyone was a private contractor, selling their services to one another. In many industries, that doesn’t work either. Williamson and other economists have studied many of these forms and come up with reasons why competitive commodity markets are imperfect and why other types of contracts are needed. (“Contract form” here is just shorthand for a particular type of business relationship—employment, franchise, commodity exchange, etc. The contract used by the participants is usually the most formal and complete description of their relationship, and the “safety agreement” that defines the ground rules of that relationship.)
These economists have identified some limitations of the ideal commodity exchange; these limitations often lead people to turn to other forms of contracts.
Security costs. Other types of transaction costs are imposed by opportunistic actors—self-interested actors who follow the letter of the contract and not necessarily the spirit of the rules of a relationship (whether those rules are legal, contractual, or informal). Security costs are imposed by, or are meant to protect a relationship from, actors who are outright malicious—actors who may break any rules, threaten violence, or commit trespassing, theft, or even violence, simply to satisfy their (alas, not uncommon) coercive preferences.
Rules are incomplete . It is difficult for the participants to anticipate all the unexpected events that might occur in a relationship, and therefore impossible to guard against their impact with rules (such as clauses in a contract). The vast majority of disputes that go to court, and the most interesting new cases, arise when the participants who enter a relationship do not have sufficient foresight to deal with them in advance.
Exit costs and/or investments specific to a particular relationship . For example, when you sign up for a class to learn Windows or Word, you are investing in a relationship with Microsoft. Another example is building a railway to a coal mine - the tower depends on the mine, and the mine operator depends on the railway to transport his coal. A third example is the layout of a factory floor to transport the output of one machine to another. The most common example is an employee who forms a relationship with a particular type of work and learns a specialized skill. In these types of relationships with high investment or high exit costs, without good contractual protections, you may end up being stuck in a bad relationship - even if the relationship goes bad and someone cheats on you, it may be very expensive to exit or you may lose your investment.
When there is no way to specify the rules and when relationship-specific investments are required, the result is often vertical integration into a firm. That coal mine might buy that railroad, the machinery might operate in a firm that owns the shop, and so on. On the other hand, when a firm becomes increasingly unable to match preferences and skills as it grows, it experiences diseconomies of scale. As Friedrich Hayek pointed out, diseconomies of scale in the distribution of knowledge about skills and preferences are a big reason why socialism works so much worse than a market economy. More generally, these diseconomies limit the size of a firm. Certain innovations (such as accounting at the beginning of the Industrial Revolution and supply chain management over the past two centuries) can enhance the reliable distribution of knowledge within a firm and thus allow it to grow in size.
Innovations that better cover contingencies or reduce the need for relationship-specific investments and exit costs can make large firms less attractive and favor a greater number of smaller firms. Between firms and markets, an intermediate state is often adopted in the form of contracts, such as franchising. A franchise is a long-term contract; roughly speaking, it specifies many of the basic rules for running a business but leaves temporary or unique issues to the local operator.
We will soon turn to perhaps the most important transaction fee, the fee that measures value , and the subject of this article.
Before we do that, though, we should point out that these types of transaction costs, while primarily studied in the context of markets, are not limited to markets or to institutions embedded in them. They arise any time goods are transferred or services are provided according to a set of rules (or customs), whether simple or complex. These costs not only provide a basis for comparing nonmarket institutions and institutions outside of markets (such as firms that supply markets), but also occur in many other institutions, including those we do not usually think of as economic institutions. For example, ancient systems of inheritance, marriage, tribute, taxation, and tort law were important parts of wealth transfer. All of these are also subject to the major transaction costs listed above—including the cost of measuring value that is the subject of this article.
Value Measurement
The value measurement problem is very broad. It arises in all systems of exchange—mutual favor, barter, currency , credit, employment, and market transactions. It is important in extortion, taxation, tribute, and judicial punishment. Even animal mutuality is based on it. Consider monkeys exchanging favors—say, some fruit for a back scratch. Scratching each other removes ticks and fleas that are out of sight or reach. But how much fruit should be exchanged for how long of scratching is considered a “fair” mutual benefit (in other words, not a fraud)? Is twenty minutes of scratching worth one or two pieces of fruit? How big is a piece of fruit? And how long is twenty minutes? In some cases, this is relatively easy to solve, such as the delayed exchange of blood between vampire bats. After the bats have finished their hunt, they are either too full or simply starving. The overfed bats can spit out some of their blood to feed the ones that haven’t eaten yet. The grateful recipient can remember the favor and repay it in a future hunt when the positions are reversed. And, in fact, a certain degree of mutual benefit occurs among vampire bats, even between non-kin.
Yet even this simple exchange of blood for blood is more complicated than it seems. How do these bats estimate the value of the blood they receive? Do they value the favor by weight, volume, taste, satiety, or something else? Similarly, even a simple exchange between monkeys, "you scratch my back, I'll scratch yours," has value measurement issues.
For animals, this measurement problem cannot be overcome in the vast majority of possible exchanges. Even remembering faces and associating them with favors is a simpler problem; the ability of two parties to agree with sufficient accuracy on the value of a favor in the first place is probably the main obstacle to mutual benefit among animals.
This is perhaps the most important obstacle to interpersonal exchange. Many types of exchange, perhaps far more than most economists realize, are made infeasible because one or both parties involved cannot estimate the value of the transaction. Most markets that exist today did not exist for most of human history, in large part because potential market participants could not measure value: estimate the value of the transaction to themselves and then use that estimate to discover and agree on a common objective measure. The measurement of value was, and is, an important issue in the development of many market-related economic institutions. As we will see below, accounting played a vital role in the emergence of large corporations and modern tax systems.
Determining a product's value by appearance is necessarily incomplete and expensive. For example, a shopper may see that an apple is bright red. This may correlate with its flavor (which is what shoppers really want from an apple, generally speaking), but it is hardly a perfect match. The appearance of an apple is not a complete indicator - sometimes an apple looks shiny and bright on the outside, but it has rotten spots on the inside. We call indirect measures - such as shine, redness, and weight - " proxies ." In fact, all measures, except price in an ideal market, are proxies - the true value is subjective and largely unstated.
Such observation has costs. You may spend some time picking out the brightest, reddest apples, and in the process you may bump other apples. The seller may wax the apples, which in turn becomes a problem for the buyer, who may be deceived by the wax and have to eat it. Sometimes these measurement costs simply arise from the imperfections of honest communication. In other cases, such as the waxing of apples, these costs arise from rational, self-interested actors playing tricks on observable events.
Measurement is a key part of institutions—auctions, contracts, accounting systems, legal tort rules, tax rules, and so on—that align incentives among participants who, prior to participating in the institution, would have had incompatible incentives. We can divide the measurement problem into two parts: the first is choosing the phenomena and the units to be used to measure them; the second is measuring those properties in a way that minimizes the interference of participants with inconsistent incentives in the measurement process.
The measurement of cost is usually much more objective than the measurement of value. Therefore, the most commonly used proxy indicators are various costs. Examples include:
a. Paying wages for hours worked rather than for the amount of output (piece rate) or other possible indicators. Time measures sacrifice, that is, the opportunity cost given up by the employee.
b. Most of the numbers that accountants record and report for assets are costs, not the market price (the money that can be recovered) that they can expect to receive when they sell the assets.
d. Non-fiat currencies and collectibles derive their value primarily from their scarcity—that is, their replacement cost.
We now turn to a particularly difficult set of measurement problems -- those faced by tax collectors. Taxation is the most conflicted economic relationship -- the one in which the incentive conflicts among the participants are the most severe -- and thus the measurement game between the participants takes on its most severe form.
Tax collector problem
Tax collection is the most efficient branch of government. It is even as efficient as many private institutions.
From the perspective of many taxpayers, this is an untenable argument, because tax collectors take money that we know how to spend (thank you!), and often spend it in completely wasteful ways. Moreover, the rules they apply often seem very arbitrary. Tax rules are often complex and never take into account the events that are important to our income and that distinguish us from other taxpayers.
How the collected taxes are spent is not within the scope of our discussion of efficiency (tax collection is rarely efficient). Only the tax collection process itself and the rules for tax collection are what we want to talk about. This article will use two pieces of evidence to prove the efficiency of tax collection rules:
- First, we will show why tax collectors have an incentive to be efficient (and what “efficient” means in this context).
- Second, we examine the problem of creating tax rules and see how the difficult problem of measuring value surfaces. Tax rules solve the problem of measuring value in clever, often very secretive ways, just as solutions have been developed in the private sector and in the legal sector. Often (because, for example, accounting has been invented), tax collectors also use solutions that are used to measure value in the private sector (e.g., the absentee investor-management relationship in a corporation). It is in these very difficult and counterintuitive trade-offs, and in the series of inquiries, audits, and collective actions that implement them, that tax collectors efficiently optimize their revenues, even if the resulting expenditures appear to taxpayers to be wasteful.
In the task of raising revenue, which benefits all relevant parts of government, the incentives of tax agencies are aligned with those of other branches of government. No other organization can raise more revenue with less expenditure than the tax agency. They can use coercion, of course, but they must overcome the same measurement problems as other users of accounting systems, such as shareholders in large corporations. Not surprisingly, then, tax agencies are sometimes pioneers of value measurement techniques and are often the first to deploy them on a large scale.
As with other types of auditors, the measurement problem for tax collectors is more difficult than it seems. Investment manager Terry Coxon has a good introduction. [6] Poor, or inaccurate, measurement allows some industries to underreport their revenues while forcing others to pay taxes on inputs they do not own. Coxon shows the result: the hurt industries may shrink; the industries that underreport revenues pay less tax than they should. In both cases, the tax agency collects less revenue than it would have if better rules had applied.
This is the application of the "Laffer curve" to the fate of a particular industry. The Laffer curve was developed by the brilliant economist Arthur Laffer; on this curve, as tax rates rise, revenues increase; but the rate of increase in revenues is increasingly slower than the rate of increase in the tax rate, due to increasing avoidance and incentives to escape the taxed activity. At a particular tax rate, for these reasons, tax revenues are maximized. Increasing the tax rate above the Laffer optimal level produces lower, not higher, government revenues. Ironically, the Laffer curve is used to support low tax rates, but it is itself a theory of taxation that maximizes government revenues, not one that maximizes social welfare or satisfies individual preferences as much as possible.
More broadly, the Laffer curve is perhaps the most important economic law of political history. Adams [1] used it to explain the rise and fall of empires. The most successful governments have always followed the underlying dictates of their incentives—both their short-term desire for revenue and their long-term success relative to other governments—to maximize revenue according to the Laffer curve. Governments that overburden taxpayers, such as the Soviet Union and the late Roman Empire, have ultimately relegated themselves to the dustbin of history, while governments with revenues below the optimal level have often been overtaken by neighbors with more abundant coffers. Historically, democratic governments have tended to maintain high tax revenues through more peaceful means (rather than conquering empty coffers). They were the first countries in history to have tax revenues far greater than the external threat, allowing them to spend lavishly on nonmilitary matters. Their tax systems are closer to the Laffer optimal than most previous types of governments. (Also, their extravagance may be due to the effectiveness of nuclear weapons in deterring threats rather than to the fact that democratic governments have stronger incentives to raise tax revenues.)
Applying the Laffer curve to study the relative effects of tax rules on different industries leads us to conclude that the desire to maximize tax revenues leads tax collectors to want to accurately measure the income and wealth that serve as the tax base. Measuring value is crucial to determining whether taxpayers have incentives to evade taxes and avoid taxed activities. To this end, taxpayers can (and do) perturb these measures in many ways. For example, most tax avoidance schemes are based on taxpayers trying to minimize value while maximizing the actual value that belongs to them. Tax collection activities also involve incentive-incompatible measurement games, similar to the games between employers and employees, investors and managers, and stores and customers, but much more severe. The same is true for plaintiffs and defendants (or the party convicted by the law).
Like accounting rules, tort law, and contract clauses, the selection of tax rules involves sacrificing complexity (or, more generally, the cost of measurement) for more accurate measures of value. And, worst of all, like other rulemaking problems, rule selection ultimately comes down to subjective measures of value. Hence, there are many cases where tax provisions are unfair or can be circumvented. Because tax collectors cannot read minds, tax rules and judgments necessarily translate into subjective value judgments about what a “reasonable” or “average person” would prefer in the situation. Coxon offers the following example. Suppose we want to optimize the personal income tax rules to measure income as accurately as possible. We might start with an analysis like this:
…If you look closely, you’ll see that a person has incurred costs and expenses in order to earn a salary. He or she has to pay for transportation to and from work. He or she may have purchased clothing that he or she would not have purchased if he or she were not doing the job, or eaten out for work. And he or she may have spent thousands of dollars to acquire the skills and knowledge required for the job.
Ideally, the correct rule for measuring his income would be one that somehow took all of these expenses into account. It would deduct the cost of transportation (unless he likes to wander around town in the early mornings and evenings). It would deduct the cost of decent clothes (that is, the difference between what he spends on clothes when he has the job and what he doesn't). It would deduct the difference in the price of eating out versus eating at home (unless he eats out all the time). And, every year, the ideal rule would deduct a portion of his education costs (unless he doesn't learn anything useful in his later years in school or the pleasure he gets from it is enough to make up for the costs).
Because complexity has to have a limit, and
Because tax collectors can't read minds, the government makes them follow some arbitrary rules: You can't deduct transportation expenses, you can't deduct clothes that you can wear outside of work, you can't deduct lunch that is not "business entertainment", and you can't deduct the cost of acquiring job skills (although you can deduct the cost of improving your skills).
The resulting rules often seem arbitrary, but they are not. It is a clever trade-off that is often not obvious, balancing more accurate measurement (which means more measurement costs) with the additional revenue that can be gained from it. However, such value measurement problems are not unique to taxation. They arise in assessing harm in contract and tort law, and in assigning fines in administrative and criminal law. Many private-sector rules that appear in contracts, accounting, and other instruments also have the effect of using obscure measurement tools and, on careful examination, proving to be clever solutions to nearly unsolvable problems (without resorting to mind reading or introducing unacceptable complexity to cover all cases). Such measurement problems occur in every economic system and relationship. The best solutions that human civilization has developed are, in most institutions, clever but far from perfect. There is much room for improvement, but failed social experiments in trying to improve these measures have had devastating consequences.
Laffer curves and measurement costs can also be used to analyze the relative benefits of different tax schemes to governments. For example, before the Industrial Revolution, income taxes were not levied. Most taxes were based on the price of goods sold, or on various special measures of wealth, such as the frontage of a house. (This measurement game is why you can still find very tall, deep, but narrow houses in some European cities, such as Amsterdam. The staircases in these houses are so narrow that ordinary furniture has to be moved in and out through the windows using a small crane; the crane itself is a common feature of these houses.)
- The tax distorted the Dutch economy -- literally. These houses in Amsterdam, built in the 17th and 18th centuries, often had narrow spiral staircases like this one. Furniture and other large items had to be moved in via small cranes above the top floor windows. -
Before the Industrial Revolution, income was a very private matter. However, starting in 19th-century Britain, large factories became increasingly important in the economy. Large factories and joint-stock companies, broadly speaking, were made possible by two phases of accounting technology. The first phase was double-entry bookkeeping, developed in 14th-century Italy for banks and “super-corporations” that traded with each other. The second phase was accounting and reporting technology, developed for the larger joint-stock companies of the Netherlands and England; these companies had their roots in 17th-century hard-copy companies. Accounting allowed manager-owners to track employees and, (in the second phase), non-managerial owners to track managers. These accounting technologies, along with the rise of workers’ literacy and numeracy, gave tax collectors new ways to measure value. Once these larger companies accounted for a large enough share of the value traded in a jurisdiction, it became rational for governments to exploit these measurement techniques, and they did so—the result was the most profitable tax scheme ever, the income tax.
Although the incentives of investors and managers of these listed companies are not as conflicting as those of tax collectors and taxpayers, the incentive to game the metrics is still very strong. Let’s look at the challenge that investors face after the Industrial Revolution – the accounting game of managers.
Intangible assets on financial statements
In today's business, intangible assets - such as trade secrets, intellectual property, trademarks, human resources, etc. - have become more valuable than physical assets. In business in general, and accounting in particular, it is common practice to use cost as a proxy for value. In fact, although the actual economic value of an asset is the discounted value of expected future cash flow income, the vast majority of assets are assigned a value based on their production costs (rather than expected future cash flows).
This is generally useful because (a) cost data usually have verifiable dates and events that can be signed and audited, whereas cash flow forecasts are more likely to be guesses about the future; (b) in most cases, we expect managers to behave rationally and spend money only where they expect (on average) to earn the largest returns; and (c) professional readers of financial statements know from experience what tricks managers can play (and they play because their incentives differ from those of other shareholders) and can spot signs of irrational managerial decisions (e.g., overinvesting in particular assets, or underinvesting).
Therefore, when reading financial statements, experienced readers never get too hung up on the accounting numbers for tangible assets and view them in isolation. In fact, this seemingly clear feature of tangible assets can be very misleading. Experienced auditors know that most accounting numbers represent costs rather than values, and use their knowledge of the industry to determine how well those costs reflect their values. For example, a naive reader will only look at the face value of current assets, while an experienced reader will look for unusual growth in inventory or accounts receivable. The real purpose of financial statements is to provide clues to analysts based on well-verified facts, not to provide self-soothing final answers to those who hope to value a company.
Some of the arguments against including intangibles on the balance sheet are not valid. For example, it is argued that intangibles generated internally cannot be valued because they are not purchased on the market. However, the same is often true of unique industrial investments and inventories. Methods such as specific identification have been developed to value internally generated assets and can be applied to internally generated intangibles. The allocation of common production costs of multiple intangible assets (such as a software library used in two different software programs) can be based on long-standing experience in amortizing the costs of tangible assets.
Another more valid objection is that the actual value of intangible assets, that is, their expected cash flow income, is much more uncertain than that of most tangible assets. Therefore, mapping the value to cost will also be uncertain. Only in the aggregate package of multiple investments can such a mapping be achieved with higher certainty. However, the value of some tangible assets is also very uncertain and is assigned a value figure based on production costs. Rational managers will take these risks into account and discount the value of their initial investment. The same can be done with intangible assets. Experienced readers will know when to expect high uncertainty. Usually, they will ask the management of a specific investment to provide further details. It is very wise to provide more details for intangible assets, and I will return to this point later.
On the other hand, many people propose measures of intangible assets that are untenable for accounting or financial reporting purposes. For example, many measures are said to relate to expected cash flow revenues (e.g., counting website hits, customer retention, etc., to estimate the value of a brand). The only case in which it would be appropriate to use expected value over time rather than production cost in the balance sheet is when the asset can be priced now in an open, efficiently competitive market. (For example, inventory of publicly available merchandise could be valued in this way.) Otherwise, it is much better to use cost (the actual expense event) and then leave it to the experienced reader of the financial statements to interpret the numbers appropriately.
The following are specific comments and proposals for specific types of intangible assets:
Patents and Copyrights
In all developed countries and most developing countries, companies can have these legal rights. Copyrights are very clearly defined, but in some cases, very difficult for companies and countries to actually control. Patents can be very vaguely defined, so it is uncertain whether or not rights to actual technology will be lost. However, managers may consider these risks and discount their initial investment. Therefore, if the cost can be amortized among specific patents and copyrights, the cost constitutes a proxy indicator for the value of these patent and copyright assets. This is very similar to using a cost figure for a tangible asset with highly uncertain future cash flows, and then leaving the final number to the experienced reader to interpret.
brand
In all developed countries and most developing countries, companies have legal rights in their trademarks. Companies can further control people's perceptions to the extent that their observable behavior affects people's perceptions. Some big brand names demonstrate very lasting value, while less valuable ones are likely to be forgotten. We can replicate the current accounting treatment of investment, maintenance, and depreciation of tangible assets to investment and maintenance of brands, while consumers will tend to forget brands that are not maintained over time.
human Resources
Employees are not property of the company, but the labor market is not completely homogeneous and has some stickiness. In fact, this stickiness can be measured by the company's turnover rate. Turnover rate is a very easy number to audit and perhaps provides a good way to depreciate an asset determined by the cost of hiring and training.
Final comments on intangible assets
Unless shareholders have long experience with specific types of intangible investments, it will be difficult to judge which costs are rational and in the best interests of shareholders. However, extensive reporting experimentation (although most will fail) is essential to more accurately reporting the value of assets to shareholders. Interpreting financial statements filled with intangibles is the job of an experienced analyst, not an amateur reader. For experts, the more information the better - detailed records of expenses and their amortization among intangible assets are more important to experienced shareholders than summarized records. Such detailed records should be shown to shareholders, despite objections to confidentiality. Only long experience with these details can teach shareholders whether and how to evaluate the summary information containing intangibles.
in conclusion
The measurement of value is one of the most vexing problems of human civilization. Ingenious and subtle solutions—from markets to money, from hourly wages to cost accounting—have been part of the most important steps from animals to civilization. Historically, the solution to one value measurement problem (such as accounting in big business) has also made other systems possible (the income tax, for example, had to solve the same problem before it could compete with other taxes). Now, as we move beyond an economy dominated by tangible industrial products, accounting for intangible assets may be the most important value measurement problem.
References
(Still under construction)
- Adams, Charles, For Good and Evil: The Impact of Taxes on Civilization
- Barzel, Yoram, 1982. “Measurement Cost and the Organization of Markets”, Journal of Law and Economics 25, no 1:27-48
- Cheung, Steven NS, 1969. A Theory of Share Tenancy . University of Chicago Press.
- Cheung, Steven NS, 1983. “The Contractual Nature of the Firm”, Journal of Law and Economics 2, no 1:1-22
- Coase, RH, 1937, “The Nature of the Firm”, Economica 4, no. 3:386-405
- Coase, RH, 1988 The Firm, the Market and the Law , University of Chicago Press 1988
- Coxon, T., 1996 Keep What You Earn , Times Business/Random House
- Hayek, F., “The Use of Knowledge in Society”
- Williamson, Oliver, The Economic Institutions of Capitalism , Free Press 1985
