A Comment on "The Legal Structure of the Firm"

Abstract

The Legal Structure of the Firm presents two core points. First, it argues that economic reality of the modern business enterprise, what it calls the firm, is different from and much broader than the legal entity or entities into which it is organized. My comment will argue that this first point is correct, well presented here, and a real contribution to our understanding. Second, The Legal Structure of the Firm argues that this separation between the legal entity and the business reality is a good thing, enabling positive asset partitioning and other positive attributes of capital formation which should be preserved. My comment will argue that this point is at best incompletely supported and most likely misdirected.