Re:Life is fractal, but markets are square
by JackFr on Wednesday June 26, 2019 @11:35AM
(#20285997)
> Internally, companies have full on top down planning just like governments. At larger companies this often results in silly levels of inefficiency.
This leads to Coase's transaction cost theory of the firm.
" for Coase the main reason to establish a firm is to avoid some of the transaction costs of using the price mechanism. These include discovering relevant prices (which can be reduced but not eliminated by purchasing this information through specialists), as well as the costs of negotiating and writing enforceable contracts for each transaction (which can be large if there is uncertainty). Moreover, contracts in an uncertain world will necessarily be incomplete and have to be frequently re-negotiated. The costs of haggling about division of surplus, particularly if there is asymmetric information and asset specificity, may be considerable."
This leads to Coase's transaction cost theory of the firm.
" for Coase the main reason to establish a firm is to avoid some of the transaction costs of using the price mechanism. These include discovering relevant prices (which can be reduced but not eliminated by purchasing this information through specialists), as well as the costs of negotiating and writing enforceable contracts for each transaction (which can be large if there is uncertainty). Moreover, contracts in an uncertain world will necessarily be incomplete and have to be frequently re-negotiated. The costs of haggling about division of surplus, particularly if there is asymmetric information and asset specificity, may be considerable."
https://en.wikipedia.org/wiki/Theory_of_the_firm#Transaction...