[DSRP Evidence](https://dsrpevidence.org/)

# The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid

## Details

**Authors** Hodgson, Geoffrey M.

**Year** 2002

**Publisher** International Journal of the Economics of Business

**Kind of work** article

**Discipline** Economics

**Secondary disciplines** Law & Jurisprudence, Business & Management

**Applied** false

[Read it at the publisher](https://doi.org/10.1080/13571510110102967) 
10.1080/13571510110102967

## In authors' words

### What they set out to do (purpose)

To re-examine the formal, legal conception of the firm against claims since the 1970s that the boundary between firm and market is indistinct.

### How they did it (methods)

Conceptual and historical argument in economics.

### What they found (results)

The author argues that earlier economists drew a sharp conceptual distinction between the firm and the market, that concepts such as 'internal markets', 'quasi-firms', and 'hybrid firms' are unnecessary, and that a legal definition of the firm remains sound despite relational contracting, networking, and subcontracting. Terms such as 'supplier network' or 'conglomerate' are suggested for the phenomena instead.

## Commentary

### In short

An economics article defending a sharp line between a firm and a market. It argues that so-called hybrid forms do not blur that line and are better described with other terms.

### Response

The argument turns on the value of an explicit boundary between firm and market (D) and on firms as bounded wholes made up of internal arrangements and linked to outside parties (S). It is a case about the usefulness of a distinction rather than a demonstration that the structure is universal; relational contracting is treated as something to describe, not as a pattern the paper develops, and the finding was taken from the abstract-level summary only.

**Patterns it shows** D, S

Shows the structure is there

**Added** 2026-10-16

**How to cite this** Hodgson, Geoffrey M. (2002). The Legal Nature of the Firm and the Myth of the Firm-Market Hybrid. International Journal of the Economics of Business.