Agency costs are as real as any other costs. The level of agency costs depends, among
other things, on statutory and common law and human ingenuity in devising contracts. Both the
law and the sophistication of contracts relevant to the modern corporation are the products of a
historical process in which there were strong incentives for individuals to minimize agency costs.
Moreover, there were alternative organizational forms available, and opportunities to invent new
ones. Whatever its shortcomings, the corporation has thus far survived the market test against
potential alternatives.