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Loading... The Nature of the Firm" (1937) is an article by Ronald Coase. It offered an economic explanation of why individuals choose to form partnerships, companies, and other business entities rather than trading bilaterally through contracts on a market.
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Who is Ronald Coase?
- In Brief
- Place in The Literature
- Main Argument
The Nature of the Firm is a brief essay in which Coase tries to explain why the economy is populated by a number of business firms, instead of consisting exclusively of a multitude of independent, self-employed people who contract with one another. Given that "production could be carried on without any organization [i.e. firms] at all", Coase asks,...
The traditional economic theory of the time suggested that, because the market is "efficient" (i.e. those who are best at providing each good or service most cheaply are already doing so), it should always be cheaper to contract out than to hire. See Stevens (pg 279) for an excellent, brief summary of Coase and what followed in research about firms...
In contrast to the literature of his time, Coase noted two variables. The first leads to creation of the firm; the second places an upper limit on its size.
The purpose of this paper is to bridge what appears to be a gap in economic theory between the assumption (made for some purposes) that resources are allocated by means of the price mechanism and the assumption (made for other purposes) that this allocation is dependent on the entrepreneur-co-ordinator.
- Ronald H. Coase
- 1937
Searches related to ronald coase the nature of the firm summary book 1
May 23, 1991 · In 1937, Ronald H. Coase published The Nature of the Firm, a classic paper that raised fundamental questions about the concept of the firm in economic theory. Coase proposed that the comparative costs of organizing transactions through markets, rather than within firms, are the primary determinants of the size and scope of firms.
In 1937, Ronald H. Coase published "The Nature of the Firm," a classic paper that raised fundamental questions about the concept of the firm in economic theory. Coase proposed that the...
- Oliver E. Williamson, Sidney G. Winter
- illustrated, reprint
- 236
Jul 28, 2017 · Throwing light on the magic of market co-ordination was a mainstay of the “classical” economics of the late-18th and 19th centuries. Then, in 1937, a paper published by Ronald Coase, a British...
Coase’s ‘The Nature of the Firm’ can be read as contributing to either or both a marginalist or a comparative institutional perspective, although Coase made clear in the paper that he saw its primary contribution as belonging to the former camp.
