ABSTRACT
In this chapter a general framework will be developed that overcomes the problems identified in Chapter 2. After a brief investigation into the nature of the firm the discussion will develop an abstract model of transaction cost economics. This model will be used to account for the existence of, and rationale for, firms.1 Following this the analysis will turn to more general questions about how the analysis of governance structures might be undertaken. The intention is to develop general principles, detailed development will be undertaken in later chapters.
