ABSTRACT

After a long delay the theory of the firm started to gather momentum in the 1970s, driven mainly by a belayed surge of interest1 in the ideas of Ronald Coase.2 The ‘present’ of the theory of the firm will be discussed in this chapter under three main headings. The first section considers the post-1970 theory of the firm literature per se while the second section scrutinises the relationship between the three most prominent of the modern sets of theories: the reference point, property rights and transaction cost approaches to the firm. The third section looks at the theory of privatisation. Roughly, as presented here, the contemporary theory of the firm focuses on questions to do with the existence, internal organisation and boundaries of the firm while the theoretical privatisation literature looks at issues to do with the boundary between state and private firms.