What did Coase argue about the nature of firms in his 1937 article?
Should be state-owned
Should self-regulate
Can reduce transaction costs
Must compete globally
Answer
The nature of firms: Coase argued firms emerge as a solution to minimize transaction costs. When transaction costs are high, such as negotiating and enforcing contracts, firms provide an efficient mechanism by coordinating economic activities within their organizational boundaries, reducing the need for external market transactions. Firms internalize these transactions, lowering overall costs and enhancing economic efficiency.
Coase's Economic Conundrums: Unraveling the Legacy of a Nobel Laureate
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